With Republican’s tax act behind us, practitioners are gearing up for implementation – but they are expecting some bumps along the way.
The July 4th tax act (P.L. 119-21) extends and revises several provisions of the 2017 Tax Cuts and Jobs Act that were set to expire at year end. It also adjusts the phase out of a number of clean energy tax credits. And it contains new tax provisions – like the deductions for tip and overtime income – and overhauled international tax provisions.
Next up, regulators will “try to turn the law into rules that are enforceable and administrable,” said Deloitte’s Jon Traub. And there could be some hiccups with that.
Drafting Issues
“The bill was put together very quickly at the end,” Traub explained. “Even if the policy was well-defined, the actual law-writing process was chaotic.”
Negotiations on several provisions went “up to the very last minute,” Traub said on a July 10 Deloitte briefing. “It is, in my mind, inevitable that we will find substantial drafting errors that will require a technical correction,” he added.
Traub predicts that while some of those corrections will be “minor,” others will be “more impactful.”
And it could take years to identify and make those technical corrections. “I think we may still be dealing with technical corrections from the ACA,” said Traub, adding that we’re “certainly” still making Inflation Reduction Act and Tax Cuts and Jobs Act corrections.
“As time goes on and practitioners and regulators unpack the law, there’ll be an ongoing effort to identify what needs to be fixed,” Traub said.
IRS Capacity
Beyond potential drafting issues with the swiftly passed law, practitioners are concerned that a downsized IRS may struggle to issue guidance necessary to implement the new provisions.
“IRS has a variety of avenues to provide and issue guidance,” explained American Institute of CPA’s Melanie Lauridsen. Potential guidance may come initially in the form of “non-authoritative guidance” like website posts, announcements, and FAQs, which can be an easier lift for the IRS. “But you can’t fully rely” on this type of guidance, she said.
The IRS also has, in the past – including after the TCJA, been able to “fairly quickly” issue notices, Lauridsen added during a July 14 AICPA town hall. “Notices generally include a provision for a proposed regulation” and “you can rely on them a little bit more,” Lauridsen explained.
Meanwhile, final regulations are “completely authoritative” and can be relied on “absolutely,” she said. But getting to that authoritative guidance stage will take some time, especially with a downsized IRS workforce.
“The IRS workforce looks very different today than at the beginning of 2025. Most notably, the number of employees has been reduced by more than 25 percent,” according to the National Taxpayer Advocate’s midyear report. “The magnitude of these workforce reductions has presented significant challenges, as has the absence of consistent leadership,” reads the report, noting the agency had gone through five commissioners in the first four months of 2025.
Between the Trump administration’s 20% cut to appropriated IRS funding and the reduction in supplemental funding under the Inflation Reduction Act, the Taxpayer Advocate said the agency will face an overall 37% reduction.
The Taxpayer Advocate’s report was issued days before the tax act was signed into law. But even without accounting for the need for guidance on the new provisions, the Taxpayer Advocate cautioned that reductions to IRS funding and staffing were “likely to impact taxpayers and potentially the revenue collected.”
And beyond just issuing guidance, the IRS also will need to update and create new forms to align with the recently passed tax act provisions. “Historically for the IRS, those are a big lift,” said Lauridsen, adding that a form change can take “about a year.”
Preparing for the New Law
Despite the uncertainty, practitioners are already taking steps to prepare themselves and their clients for the tax act’s changes.
For starters, “we need to immerse ourselves to understand the law,” said Jan Lewis, a tax partner at BMSS Advisors. Then the next step is determining how to communicate the changes to clients, including how a change will “fit into that particular taxpayer,” Lewis added, speaking at AICPA’s town hall.
A practitioner’s immediate response to the new tax act may look different depending on firm size. Mark Gallegos, a tax partner at Porte Brown, said his firm was starting by identifying “internal champions” to “lead practice groups” on various segments of the tax act. But Robert Keebler of Keebler & Associates, which totals about 15 people, said he is focused on the many trainings becoming available on the new act.
As far as next steps, Gallegos said Porte Brown is gearing up for client outreach, as well as preparing webinars and articles on the new law. The firm also is “mining” its tax software to determine which clients need outreach quickly for planning purposes. That might include clients that took the research and experimental expenditures deduction under IRC § 174 and capitalized between 2022 and 2024, and those whose state and local tax (SALT) exposure will change.
Keebler, however, is “focused” on accounting software updates. He noted the many new phase-outs in the tax act, for things ranging from SALT to the senior deduction. “These things are not going to be intuitive,” said Keebler, “so we have to be disciplined with using software.”
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