WASHINGTON — The legislative blitz that rocketed the $1.5 trillion tax cut through Congress in less than two months created a host of errors and ambiguities in the law that businesses big and small are just now discovering and scrambling to address.
Companies and trade groups are pushing the Treasury Department and Congress to fix the law’s consequences, some intended and some not, including provisions that disadvantage certain farmers, hurt restaurateurs and retailers, and could balloon the tax bills of large multinational corporations.
While the Treasury can clear up uncertainty about some of the murky provisions, actual errors and unintended language can be solved only legislatively — at a time when Democrats seem disinclined to lend votes to shoring up a law they had no hand in passing and are actively trying to dismantle.
On Thursday, the US Chamber of Commerce sent the Treasury Department 15 pages of detailed requests for clarification on how the law affects multinational corporations, mutual fund investors and mom-and-pop pass-through entities.
It was a public display of the lobbying that businesses are waging primarily behind the scenes to change or shape enforcement of the law, most notably its byzantine new provisions intended to crack down on multinationals sheltering profits abroad for tax purposes.
“The question is whether our system is set up today in a way to do little mid-course corrections as time goes on, or is it not,” said Dana Trier, who left the Treasury Department in February after serving as deputy assistant secretary for tax policy during the drafting of the bill.
“The mistakes or unintended consequences for this or that group won’t show up for months,” Trier said.
The result could be a tax-theme replay of the years after passage of the Affordable Care Act, when Republicans refused to cooperate with technical corrections legislation and a Democratic administration was forced to push the limits of its authority to address concerns in the enforcement of its signature policy accomplishment.
Among the problematic portions to emerge is what has become known as the “grain glitch.”
A late change to the legislation altered a deduction for US production in a way that permitted farmers to deduct 20 percent of their total sales to cooperatives — agricultural organizations owned by groups of farmers that operate for the benefit of their members.
This allows farmers to deeply reduce their tax bills, but it has caused an uproar among independent agriculture businesses that say they can no longer compete with cooperatives, since farmers would choose to sell to cooperatives to take advantage of the more generous tax break.
Leaders of independent grain companies from Oklahoma, Minnesota, and South Dakota traveled to Washington in late February to make their case to lawmakers that a fix was urgently needed, warning that businesses like theirs could collapse or be sold.
“We will be much more receptive to selling our business if this happens,” said Todd Lafferty of Wheeler Brothers Grain Co. in Watonga, Okla. “It’s going to result in further consolidation of the industry, but that’s not what we want to do.”
But legislative fixes will be tough. Unlike the original tax bill, which passed along party lines, legislation correcting any portion of the tax bill will require Democratic votes to get through the Senate.