President Donald Trump has issued an executive order reinstating a 2018 memorandum of agreement between Treasury and the Office of Management and Budget (OMB) that requires the OMB’s Office of Information and Regulatory Affairs (OIRA) to review most tax regulations. The decision could slow down the regulatory process but creates an extra venue for taxpayers to lobby on guidance.
Trump’s executive order also directs agencies to identify 10 prior regulations to eliminate for every one issued, an increased from a 2-to-1 ratio in his first term. This process was rarely followed for tax regulations, although some actions were taken to clean up and remove obsolete or “deadwood” regulations.
Under the reinstated agreement, tax regulations will be subject to review if they raise novel legal or policy issues, interfere with action by another agency, or have a non-revenue economic impact of $100 million or more. OIRA generally has 45 days to complete a review, though there was an expedited process for certain Tax Cuts and Jobs Act regulations.
When first implemented in 2018, the memorandum reversed a long-standing exception for tax regulations from a 1993 order (Executive Order 12866) that generally requires federal agencies to submit major regulations to OIRA for review. The 2018 memorandum lasted for nearly five years before the Biden administration released a new agreement in 2023 that once again provided an exception for tax regulations. The new order essentially reinstates the review process in place from April 2018 through June 2023.
In practice, nearly all meaningful regulations were submitted to OIRA for review under the 2018 agreement, and reviews occasionally went beyond the 45-day deadline. The effect of the reviews was publicly available, as disclosure rules allowed for taxpayers to view any changes made to guidance after the OIRA review. Many taxpayers lobbying on regulatory issues had hoped to find a more receptive audience at OIRA than at Treasury, but substantive changes during the OIRA review process were relatively rare. OIRA often prompted Treasury to further explain their reasoning in preambles, and the economic analysis was often more robust. It’s possible that the new Trump administration could use the OIRA review process more aggressively on tax regulations this term.
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