October 09, 2018


Current Guidance is Counter to Clear Statutory Language and Congressional Intent of Tax Reform

WASHINGTON, D.C.— The U.S. Chamber of Commerce and the S Corporation Association, joined by a diverse coalition of 28 business organizations, today urged the Treasury Department and the Internal Revenue Service (IRS) to give American jobs creators a choice about how their tax overpayments are applied. In the letter, the coalition called on the IRS to revise its Section 965 overpayment guidance in a way that ensures as little disruption as possible to normal business operations and encourages the U.S. economy to achieve its true growth potential.

“The current IRS guidance creates a sweeping, negative impact on business operations of all sizes and across all sectors,” said U.S. Chamber Vice President for Tax Policy and Economic Development and Chief Tax Counsel Caroline Harris. “This new tax code is designed not to pick winners and losers, but the IRS’s current guidance for overpayments does just that. We urge the IRS to change course and to implement this provision the way Congress intended – to grow and strengthen American businesses.”

The letter detailed how the IRS’s current Section 965 overpayment guidance harms businesses of all sizes, creates a new penalty for taxpayers who overpay their estimated taxes, and contradicts the clear statutory language and legislative intent of the “Tax Cuts and Jobs Act.” The organizations added that the guidance issued by the IRS as well as an August memorandum from the agency’s chief counsel seek to overturn Section 965 overpayment policy without statutory authority.

“S corporations were excluded from the new territorial system, so Congress reasonably exempted them from the toll charge tax as well,” S Corporation Association President Brian Reardonsaid. “A policy of applying tax overpayments to these deferred 965 liabilities effectively undermines congressional intent and should be reversed. S corporation owners should not have to pay a ticket for a ride they don’t get.”

The full letter is available online here.

The U.S. Chamber first alerted the Treasury Department and IRS to Section 965 overpayment concerns in an August 21, 2018, letter, which is available online here.

The U.S. Chamber of Commerce is the world’s largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations.