Treasury and IRS target hundreds of ‘dead wood’ regulations for removal

Tax Hot Topics newsletter The Treasury Department and IRS have proposed guidance in line with the presidential executive orders issued in 2017 that seek to review existing regulations and direct the Treasury and IRS to “reduce the burden existing tax regulations impose” on taxpayers.

The proposed regulation (REG-132197-17) would streamline Treasury regulations by removing 298 regulations that “do not have any current or future applicability” under the Code, and amending 79 regulations to reflect the proposed removal of the 298 regulations.

Executive Order (EO) 13789, which was issued on April 21, 2017, by the president, ordered Treasury to review all “significant tax regulations” issued on or after Jan. 1, 2016, and to submit a report within 60 days that identifies those regulations that either (1) impose an undue burden on U.S. taxpayers, (2) add undue complexity to federal tax laws or (3) exceed the statutory authority of the IRS. The Treasury issued such a report on Oct. 4, 2017, that targeted eight regulations for withdrawal, partial revocation, or substantial modification. Treasury also indicated at that time that the IRS had identified more than 200 other regulations for potential revocation.

EO 13771, which was issued on Jan. 30, generally requires that for each new regulation issued, at least two prior regulations be identified for elimination.

The regulations identified in the proposed regulation fall into three categories: (1) regulations interpreting provisions of the Code that have been repealed; (2) regulations interpreting Code provisions that, while not repealed, have been significantly revised, and the existing regulations to do not account for these statutory changes; and (3) regulations that, by the terms of the relevant Code provisions, or the regulations themselves, are no longer applicable.

As with other Treasury regulations, the proposed regulation will go through a notice-and-comment process prior to being finalized. Comments are requested, but no deadline was given by the IRS. A public hearing may be scheduled if requested in writing, according to the proposed regulation.

Contact Liz Askey
Managing Director, Tax Practice Policy & Quality
T +1 202 521 1513

Shamik Trivedi
Senior Manager, Washington National Tax Office
T +1 202 521 1511

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