Section 965 Transition Tax Overpayment Addressed in Technical Corrections

By and on January 4, 2019

On January 2, 2019, the outgoing Chair of the House Ways and Means Committee, Kevin Brady (R-TX), released the Tax Technical and Clerical Corrections Act (the Bill), addressing several technical issues associated with the Tax Cuts and Jobs Act (P.L. 115-97) (TCJA). The Bill includes certain provisions that, if enacted, would affirm Congress’ intent that taxpayers with an overpayment with respect to an installment payment of the transition tax under Internal Revenue Code (Code) Section 965 should be able to claim a credit or refund with respect to such amount. The provisions in the Bill with respect to Code Section 965 overpayments are largely consistent with similar draft legislation introduced on November 26, 2018 (the Retirement, Savings and Other Tax Relief Act of 2018 and the Taxpayer First Act of 2018, or H.R. 88; see prior discussion here). In particular, the Bill provides that where a taxpayer that made an election under Code Section 965(h)(1) to pay the net tax liability under Section 965 in installments has filed a request for a credit or refund with respect to an overpayment, the Internal Revenue Service cannot take any installment into account as a liability for purposes of determining whether an overpayment exists. If enacted, the Bill would permit taxpayers to claim a refund or credit with respect to an installment payment of the taxpayer’s transition tax under Code Section 965.

The Bill was issued the day before the 116th Congress was sworn in and on the last day before Rep. Richard Neal (D-MA) assumed the post as Chair of the House Ways and Means Committee. The issuance of the Bill by former Chairman Brady was therefore intended to provide incoming Chairman Neal with a basis for what corrections Republicans think should be made to the TCJA. Chairman Neal has previously committed to hold hearings on the impact of US tax reform and on any changes suggested to correct the law. Although the Bill is not expected to pass immediately, it is encouraging that Congress has included these provisions in the Bill and that such provisions are largely consistent with the provisions in H.R. 88.

Andrew R. RobersonAndrew R. Roberson
Andrew (Andy) R. Roberson focuses his practice on tax controversy and litigation matters. He represents clients before the Internal Revenue Service (IRS) Examination Division and Appeals Office and has been involved in more than 50 matters at all levels of the federal court system, including the US Tax Court, several US courts of appeal and the Supreme Court. Andy has experience settling tax disputes through alternative dispute resolution procedures, including Fast Track Settlement and Post-Appeals Mediation, and in representing clients in Compliance Assurance Process (CAP) audits. He also represents individuals in Global High Wealth Industry Group audits and in connection with offshore disclosure programs. Read Andy Roberson's full bio.


Justin G. CrouseJustin G. Crouse
Justin G. Crouse focuses his practice on US and international tax matters. He has collaborated with clients from a range of industries to research and develop international tax planning opportunities, including global holding company structures, intellectual property migration, foreign tax credit planning and repatriation. Read Justin Crouse's full bio.

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