The IRS today released an advance version of Notice 2017-38 that contains a list of eight tax regulations that have been identified as either imposing an undue financial burden on taxpayers, or adding excessive complexity to the tax system. This list is in response to an April 2017 executive order, and the IRS release notes that the U.S. Treasury Department has identified eight regulations that satisfy the criteria of the executive order—including regulations issued under sections 385, 987, and 367.
Read Notice 2017-38 [PDF 38 KB]
President Trump on April 21, 2017, signed an executive order (Executive Order 13789) directing U.S. Treasury to examine recent tax regulations to determine whether any of the regulatory projects: (1) imposed an undue financial burden on U.S. taxpayers; (2) added undue complexity to the federal tax laws; or (3) exceeded the statutory authority of the IRS.
Treasury was directed to review “significant tax regulations” issued on or after January 1, 2016, and to issue an interim report no later than 60 days after April 21. Treasury was then directed to submit a report to the president recommending specific actions to mitigate the burden imposed by regulations identified in the interim report. The final report to the president is due by September 18, 2017.
According to the executive order, Treasury was to take “appropriate steps” to delay or suspend the effective date of the identified regulations, and to modify or rescind the regulations, through notice and comment rulemaking.
Today’s IRS notice explains that for the period from January 1, 2016, through April 21, 2017:
Treasury declined to state that any of the potential significant regulations exceeded the statutory authority of the IRS (the third criterion of the executive order).
The IRS notice states that Treasury concluded that the eight regulations identified for burden reduction satisfy at least one of the first two criteria specified by Executive Order 13789. The notice provides a high-level summary of the comments received with respect to the identified regulations, and indicates that Treasury will propose reforms—ranging from streamlining “problematic rule provisions” to full repeal of the regulations—in the final report submitted to the president.
The eight regulatory projects are:
Comments are requested about whether these eight regulations need to be rescinded or modified, and if modified, how this is to be done to reduce burdens and complexity. Comments are due by August 7, 2017.
Comments are also requested as to whether any existing regulations warrant “a broader review.” These comments are due by July 31, 2017.
Today’s notice does not specify what action Treasury will take or even when any such changes would be effective. This indicates that the most prudent course of action generally would be for taxpayers to continue applying the regulations in their current form pending further, definitive guidance.
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