“The question is whether our system is set up today in a way to do little midcourse corrections as time goes on, or is it not,” said Dana Trier, who left the Treasury Department last month 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.”
The result could be a tax-theme replay of the years after passage of the Affordable Care Act, when Republicans refused to cooperate with so-called 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 so far is what has become known as the “grain glitch.” A late change to the legislation altered a deduction for United States 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.
The conservative Tax Foundation said that the flaw should be addressed quickly, saying that, if left in place, “the deduction would allow some farmers to effectively become tax-exempt.”
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, co-chief executive of Wheeler Brothers Grain Company in Watonga, Okla. “It’s going to result in further consolidation of the industry, but that’s not what we want to do.”
Mr. Lafferty, a Republican, said he was excited about the new tax legislation until he heard about the provision. Despite the other benefits of the law, he said, he would rather be governed by the old tax code than face a competitive disadvantage to nearby cooperatives.
Thomas Lien Jr., of Dakota Mill and Grain in Rapid City, S.D., said that he already regretted the $20 million investment his business made last year to build a shuttle loader grain elevator for moving large quantities of grain because farmers were now only interested in selling to cooperatives. Now he wondered how his business and others like it could survive.
“It’s going to drive investments in rural America away,” Mr. Lien said. “We can’t compete.”
Restaurants and retailers are also concerned about a drafting error that will mitigate the tax benefits they receive when renovating. The law was supposed to simplify depreciation rules for businesses making renovations or other property improvements so that they could deduct these expenses over 15 years. Because of a mistake in the writing of the bill, the cost of these investments must be deducted over 39 years, diminishing the intended benefit.
The top lobbyist for the restaurant industry said that she was hopeful that lawmakers had heard their complaints.
“It is our understanding that it was an honest mistake,” said the lobbyist, Cicely Simpson, the executive vice president of public affairs at the National Restaurant Association. “The bipartisan intent behind the law was a 15-year depreciation period, and we are confident Congress will have this resolved quickly.”
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.
The law passed Congress via the budget reconciliation process, which bypassed a Senate filibuster and enabled Republicans to approve it on a party-line vote in both chambers. A fix-it bill would need at least nine Democrats in the Senate to join Republicans.
For now, at least, Democratic leaders appear disinclined to provide those votes. They are still fuming over the partisan process that delivered the bill to President Trump’s desk.
“I’m willing to make technical changes, but they have to be substantive, too,” said Senator Sherrod Brown, Democrat of Ohio and a member of the Finance Committee. “We’re not just going to sit down and fix the things they did badly because they did it in the dead of night with lobbyists at the table.”
A second, much larger group of issues are those that need Treasury clarification — areas of the law that companies say could be construed in any number of ways, with vastly differing consequences for tax liabilities.
That includes questions over which businesses, and what types of business income, qualify for a new 20 percent deduction for so-called pass-through entities, whose owners pay taxes on the companies’ profits through the individual code. For example, the Chamber of Commerce is pushing to ensure the deduction applies to investors in mutual funds that own stakes in real estate investment trusts.
It also includes a dizzying number of concerns over the new system for taxing multinational corporations that the law created.
Those corporations are upset over the possible scope of two provisions that collectively form a sort of alternative minimum tax for companies operating in the United States and overseas. The bill’s architects pitched those provisions as a means of cracking down on companies that shift profits to foreign parent companies or subsidiaries to avoid American taxes.
But affected companies say they fear the legislation could be construed overly broadly by officials at Treasury or the Internal Revenue Service, subjecting activities that those companies do not consider forms of profit-shifting to the minimum tax.
A Chevron executive called one of the minimum tax provisions “a disaster” last month at a public forum. At the same event, an Eli Lilly official said the provisions discouraged companies from holding intellectual property in the United States, counter to the intent of Congress, because they forced those companies to reimburse foreign affiliates doing work outside the country.
Many companies are looking to Treasury to resolve those concerns. The U.S. Chamber of Commerce’s list of requests includes several suggestions for ways the department can limit the minimum tax’s reach.
Republican lawmakers who wrote the bill, however, are not looking kindly on efforts to change the intent of the law. Their staff members say they have asked businesses to make a data-based case for why their proposals are necessary.
“I stress the importance of carrying out legislative intent,” Senator Orrin G. Hatch, Republican of Utah and the chairman of the Finance Committee, wrote in a letter last month to Steven Mnuchin, the Treasury secretary. The intent, he added, was to remove “damaging tax-base erosion found in the former tax system” — a reference to eroding the tax base of the United States by shifting corporate profits abroad.
Rohit Kumar, a former Senate leadership aide who now leads a tax policy group at the accounting firm PwC, said turmoil in the first months of a new and sweeping law was to be expected. “Everyone needs to stop and take a deep breath,” he said. “This is normal, against the magnitude of the change.”
Still, companies that want change will undoubtedly continue pressuring Congress, Treasury and the Internal Revenue Service, Mr. Kumar said.
“Nature favors the bold,” he added. “I suppose you could just sit back and wait, but a better strategy is to be engaging with Treasury and I.R.S., and engaging with the Hill.”
David J. Kautter, the acting commissioner of the Internal Revenue Service and Treasury’s assistant secretary for tax policy, said last month that the agency had a detailed plan for introducing clarifications and, when possible, fixes to the legislation.
“We have multiple work teams focused on the entire bill,” Mr. Kautter said. “We’re going full bore on guidance.”
Republicans and lobbyists say they are optimistic that Congress will act soon on at least the grain glitch. Some lawmakers have been musing about stuffing more fixes into a big, must-pass spending bill expected this month.
But that bill would require the support of the Democratic Party, and could give it an ability to demand something in return — such as rollbacks of limitations on state and local tax deductions, which primarily hurt taxpayers in liberal states.