The Treasury Department and IRS should issue guidance on income tax reporting for trusts and estates under the One Big Beautiful Bill Act to ensure consistent application of the law and avoid a confusing mix of state interpretations on how to implement it, the American Bankers Association said today.
Among the many tax provisions in the OBBBA was new language on trust and estate income tax reporting, which took effect at the end of last year. In a letter to the agencies, ABA said that because banks and other financial institutions administer a substantial share of fiduciary assets, prompt guidance is essential to ensure consistent application of new tax policy.
“The need for timely guidance is further heightened by the ongoing state conformity process following enactment of OBBBA,” ABA said. “If states adopt differing conformity positions while federal treatment remains uncertain, fiduciaries and financial institutions could face significant compliance and reporting challenges resulting from inconsistent federal and state tax treatment.”
ABA offered several recommendations on what the guidance should include, such as clarifications about the treatment of deductions, and suggested the agencies implement them well before the April 15, 2027, filing deadline for the current tax year.
