President Donald Trump issued an executive order
(EO) on April 21 directing Treasury to review “all significant” regulations issued after Jan. 1, 2016, and recommend for modification or rescission any that impose an undue financial burden on U.S. taxpayers, add undue complexity to federal tax laws or exceed the statutory authority of the IRS.
The EO requires Treasury to complete the report within 60 days of the date of the order, which was issued on April 21. Within 150 days of that date, Treasury is to recommend specific actions to “mitigate the burden imposed by regulations” identified in that report. Treasury is authorized as part of that mitigation to delay or suspend effective dates and modify or rescind regulations it deems to be burdensome to taxpayers.
The EO could put several regulations issued in 2016 and 2017 in the crosshairs, including unpopular final regulations under Section 385 (T.D. 9790) on the determination of debt versus equity. Other potentially controversial regulations Treasury could target include inversion regulations under Section 956 (T.D. 9792) and partnership disguised sale regulations under Section 707 (T.D. 9787).
The EO also directs Treasury to review the current exemption for certain tax regulations from review by the Office of Management and Budget under Executive Order 12866. Such a move could considerably slow down the IRS regulatory process, which is already mired in uncertainty over the EO requiring two regulations to be removed for every new one issued.
National Managing Principal, Washington National Tax Office
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