Tax Cuts and Jobs Act – A Letter to My Clients
Here is a letter I sent to some clients today with some advice for handling the process of tax law changes.
As you probably know, a tax cut has been the talk of the town for several months now. Yesterday, the Ways and Means Committee in the House of Representatives released the initial text of the Tax Cuts and Jobs Act. There is a lot of information to unpack in the plan in its initial form and I am doing that. However, I wanted to reach out to let you know a few key things.
- This is likely not the final version of the tax bill. There are many steps left in the process and many of the proposals in the bill are going to be hotly contested. Therefore, it is prudent to monitor things closely without taking any specific positions on tax law changes until the dust settles and things become more clear.
- The changes are not going to affect 2017. It is administratively impossible to make major changes to tax laws, the underlying tax returns and the systems that support them by the time the 2017 tax season starts. Everything I read yesterday indicated that the changes would be effective in 2018. Although that could change.
- Being a small business owner with a passthrough entity is a strong position. I don’t want to get into too many specifics as the context of the bill is likely to change. That said, there are things taking shape that incentivize small business owners to grow as a direct result of tax savings. That should be a cause for excitement.
- I am your advocate and will keep you informed. You should expect to hear from me in the coming weeks in the form of emails, articles and even short videos. As things start to settle and we can make sense of the changes that materialize, I will be letting you know about them.
- I care about your tax savings. You may recall hearing me talk about Tax Efficiency. In simple terms that refers to how much of your hard-earned money you get to keep after paying your taxes. Once the changes are official, I will be working with you to make sure we are doing everything we can to get your Tax Efficiency as high as possible
- We will address your specific tax situation in our year-end tax planning meeting. I will be providing you a customized tax analysis based on the data we have available to give you a sense of your specific position.
I’m sharing this letter in case you are getting any advice during this time of tax uncertainty.