New guidance on a tax law change limiting interest deductibility tells taxpayers that the IRS is making progress in helping businesses deal with the change, but some of the more challenging issues have yet to be broached.

Tony Nitti, a tax partner at WithumSmith+Brown PC in Aspen, Colo., joins Talking Tax host Allyson Versprille to discuss the guidance—Notice 2018-28—and what it means for businesses.

The amended tax code Section 163(j) limits the business interest deduction to 30 percent of a company’s earnings before interest, taxes, depreciation, and amortization for four years starting in 2018. Beginning in 2022, the deduction will be limited to 30 percent of earnings before interest and taxes.

The IRS's notice provides a handful of answers on how the limitation will work. It confirms, for example, that interest payments on debt held by members of a consolidated group—a group of corporations with a shared parent company that is treated as a single entity for tax purposes—would be allocated at the consolidated group level, rather than on a member-by-member basis. Government officials had been hinting at this clarification for the last several months.

While the notice is a step in the right direction, the Internal Revenue Service and Treasury Department still have a lot of work ahead, Nitti says.