KPMG report: Tax provisions enacted in December 2019 appropriations legislation

Tax provisions enacted in appropriations legislation

President Trump on December 20, 2019, signed into law H.R. 1865 (“The Further Consolidated Appropriations Act, 2020”), a government funding bill that includes significant tax provisions addressing:

  • Extensions of 34 expired or expiring provisions—as well as disaster tax relief
  • Repeal of the medical device excise tax, the annual fee on health insurance providers, and the excise tax on high cost employer-sponsored health coverage (sometimes referred to as the “Cadillac tax”)—as well as an extension of the Patient-Centered Outcomes Research Institute (PCORI) fee under Code sections 4375 and 4376
  • Changes to retirement savings and pensions (the “SECURE” Act) as well as to miners’ pensions and related matters (the “Bipartisan American Miners Act of 2019”)
  • Repeal of modifications to the treatment of unrelated business taxable income that had been made by the 2017 tax law commonly referred to as the Tax Cuts and Jobs Act (TCJA)
  • Modifications to the excise tax on private foundations
  • Modification of rules for determining tax-exempt status of certain mutual or cooperative telephone or electric companies
  • Modification of TCJA rules relating to taxation of unearned income of certain children (repeal of Code section 1(j)(4))
  • Revenue raisers relating to modification of required distribution rules for designated beneficiaries (relevant to so-called “stretch IRAs”), reduction in minimum age for certain allowable in-service distributions (included in miners’ pension provisions), increase in the Code section 6651 failure-to-file penalty, increase in the Code section 6652 penalty for failure to file retirement plan returns, and increased information sharing relating to excise taxes

According to the Joint Committee on Taxation (JCT), the revenue provisions of H.R. 1865 would lose approximately $426 billion (net) over a 10-year period.

The new law includes some substantive changes to TCJA provisions. However, it does not address errors made in drafting the TCJA (i.e., TJCA technical corrections). Thus, for example, it does not correct errors made in drafting provisions relating to the depreciation of qualified improvement property, the effective date of net operating loss deduction changes, or the deduction of legal fees in connection with sexual misconduct.

Read a December 2019 report [PDF 987 KB] (13 pages) prepared by KPMG LLP providing more information, as well as preliminary analysis and observations, regarding some of the key tax provisions in the new law.

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