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TAX TAKE: Fix Me Now – Potential Implications of the SECURE 2.0 Technical Corrections Letter

Tax Alert

Last week, the Chairs and Ranking Members of the congressional tax-writing committees issued a noteworthy letter to Treasury Secretary Janet Yellen and Internal Revenue Service (IRS) Commissioner Daniel Werfel. The letter clarifies congressional intent with respect to several retirement provisions enacted as part of the SECURE 2.0 Act of 2022. Significantly, the letter also notes that the tax-writing committee leadership intends to introduce a technical corrections bill "which may include items not addressed in the letter."

In addition to providing some clarity for a number of time-sensitive and important retirement provisions (including Roth plan catch-up contributions), the letter has potential implications for the broader technical corrections process. The introduction of a bipartisan and bicameral technical corrections bills in the House and Senate suggests a return to "regular order" – an encouraging development after years in which both parties' enactment of tax legislation on a partisan basis through reconciliation led to the politicization and breakdown of the process of getting technical corrections agreed upon and enacted. Furthermore, despite uncertainty around when the technical corrections bill might be introduced, it could be positioned for consideration at year-end when Congress must deal with several "must pass" bills including government funding, FAA reauthorization, and a farm bill extension that technically expire on September 30th but likely will get extended out until the end of the year. 

Also of interest is the declaration that the pending technical corrections bill "may include items not addressed in the letter." Given the aforementioned breakdown in the technical corrections process, there is built-up need for the passage of technical corrections that have piled up over the intervening decade since the last comprehensive technical corrections tax bill made it to the President's desk. For example, many of the pending technical corrections relate to such major pieces of legislation as the Patient Protection and Affordable Care Act (ACA) (2013) and the Tax Cuts and Jobs Act of 2017 (TCJA).
  
It is important to note that the technical corrections referred to in the letter relate to the SECURE 2.0 Act that was enacted with broad bipartisan support late last year. Whether the bipartisan cooperation that led to agreement on SECURE 2.0 technical corrections and the development of the letter extends to addressing needed technical corrections on earlier partisan bills is yet to be seen. But supporters of technical corrections see last week's letter as a promising sign of a return to the standard technical corrections process. #TaxTake

Upcoming Speaking Engagements and Events

Loren will present "Pillar Two and Potential U.S. Response," a panel discussion at the 2023 Texas Federal Tax Institute Annual Conference on June 7. 

On June 20, Loren will present, "U.S. Tax Update - Global Trends with Local Impacts," at the TP Minds International 2023 Conference in London.



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