Fiscal Year 2018 Budget Includes Proposals on Several Tax Items

2018 Budget includes proposals on several tax items

The Office of Management and Budget (OMB) released President Donald Trump’s proposed Fiscal Year 2018 budget for the federal government on Tuesday May 23rd. Included in the proposals were several tax items, including a proposal to authorize the IRS to regulate all paid tax return preparers.

The budget also calls for giving the IRS more flexible authority to address correctable errors. The proposal would expand the IRS’s authority to correct errors on a return to include cases where (1) the information provided by the taxpayer does not match information the IRS has in its databases; (2) the taxpayer has exceeded the lifetime limit for claiming a particular credit or deduction; or (3) the taxpayer has failed to include with the return required documentation.
IRS funding

In addition to the above specific proposals, the budget calls for a “comprehensive overhaul to our tax code” to encourage economic growth and investment and reiterates several principles that the Trump administration would like to see incorporated into tax reform. It also assumes any tax reform will be revenue-neutral.

For individuals, the budget calls for:

  • Lower income tax rates;
  • An increased standard deduction;
  • Help for child and dependent care expenses;
  • Protection for homeownership, charitable giving, and retirement savings; and
  • Repeal of the alternative minimum tax, the net investment income tax, and the estate tax.

For businesses, the budget calls for:

  • Lower tax rates;
  • Elimination of most tax breaks;
    • A move to a territorial system of taxation, including a one-time repatriation tax on accumulated overseas income.

    The budget overview says that these principles will guide the administration’s “discussions with taxpayers, businesses, Members of Congress, and other stakeholders.”