IRS Said to Need Additional $1B to Implement New Tax Law

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The cash-strapped agency hasn't yet determined how much money it will need to implement the new tax law, but a preliminary assessment past year put the additional cost at roughly $495 million over fiscal 2018 and fiscal 2019, which begins October 1. The IRS emphasizes this information will be created to work with the existing Forms W-4 that employees have already filed, and no further action by taxpayers is needed at this time. The IRS will work with the business and payroll community to encourage workers to file new Forms W-4 next year and share information on changes in the new tax law that impact withholding.

Or if you don't have a tax adviser, you might use the new withholding calculators that will become available from the IRS and from tax preparation firms like H&R Block to see whether the allowances you've been claiming still make sense under the new tax regime.

The new guidance, developed jointly by Treasury's Office of Tax Policy and the IRS, was constructed to work within the constraints of the existing payroll withholding system in order to deliver the benefits of the tax cuts as soon as possible, to as many Americans as possible, and with as little disruption as possible. Setting up a new withholding system is expected to take most of 2018.

Mr. Mnuchin on Thursday said that the release of the new tables had not been rushed and that the I.R.S., which is under the umbrella of the Treasury Department, wants taxpayers to withhold the correct amount of money.

Inc. All rights reserved. This material may not be published broadcast rewritten or redistributed
Inc. All rights reserved. This material may not be published broadcast rewritten or redistributed

The government is requiring employers to begin using the new guidelines as soon as possible, but "no later than February 15". With these new guidelines, companies can start adjusting employee paychecks.

Yahoo Finance ran the numbers and found a net drop in tax withheld in each of 11 income categories we examined.

While Republicans have been the most vocal proponents of privatizing public services, congressional Democrats are equally responsible for the IRS' program.

Additionally, Treasury and the IRS will engage in a thorough and collaborative process to release a new W-4 for 2019 by the end of the year.

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That, in turn, can mean a big refund come tax time.

Mnuchin threw cold water Thursday on a proposal floated by two such states - California and New Jersey - to get around the $10,000 limit on deducting state and local taxes from federal income.

Some businesses have already responded to those anticipated changes by granting bonuses and wage increases and by making or planning for additional investments.

For people with simpler tax situations, the new tables are created to produce the correct amount of tax withholding.

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Although the new calculator will be most helpful to taxpayers with complicated taxes, he urged everyone to use it.

For example, "the tables aren't created to account for married couples with two incomes, or side jobs with no withholdings", said Kathy Pickering, executive director of The Tax Institute at H&R Block.

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