Treasury, IRS Issue Final Regs on Section 199A Pass-Through Deductions

The Treasury Department and the Internal Revenue Service on Friday issued final regulations providing guidance requested by the Mortgage Bankers Association on the section 199A pass-through deduction included in the Tax Cuts and Jobs Act.  

Pete Mills, MBA Senior Vice President of Residential Policy and Member Engagement, said the final regulations ( provide some additional clarity on certain matters that MBA requested in an October letter. In that letter, MBA recommended Treasury, the IRS and the Office of Management and Budget confirm that mortgage banking companies, including independent mortgage bankers, are not trades or businesses considered to be Specified Service Trades or Businesses (SSTBs) and, therefore, should be eligible for the pass-through deduction.  

For example, the final regulations, confirm that the performance of services in the field of financial services does not include taking deposits or making loans. “In effect, the regulations specifically clarify that the trade or business of making loans is not an SSTB and is therefore eligible for the pass through deduction,” the regs note. “The regulations also provide that “arranging” lending transactions between a lender and borrower constitutes the performance of services in the field of financial services, and is therefore an SSTB. However, “additional analysis and interpretation will be needed to determine the impact of other provisions as they apply to the facts and circumstances of each member’s business model and activities,” Mills said.  

MBA has created a preliminary summary of the final regulations (, including areas of clarification and various open questions that remain. MBA will continue to analyze the final guidance.  

MBA members with questions about the final regs can contact Fran Mordi at or Bruce Oliver at