The U.S. Treasury Department and IRS today released for publication in the Federal Register a notice of withdrawal of proposed regulations (REG-129067-15) under section 103 concerning the definition of “political subdivision” for purposes of issuing tax-exempt municipal bonds.
Today’s notice of withdrawal of the regulations proposed in February 2016 is the second one released by Treasury this week. This action is pursuant to an executive order and Treasury report.
Read the notice of withdrawal of the proposed regulations [PDF 183 KB]
President Trump in April 2017, signed an executive order (Executive Order 13789) directing the 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. 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.
The executive order directed Treasury to review “significant tax regulations” issued on or after January 1, 2016, and to issue reports according to a timetable.
The IRS on July 7, 2017, released Notice 2017-38 [PDF 38 KB] providing an interim list of eight tax regulations identified as either imposing an undue financial burden on taxpayers, or adding excessive complexity to the tax system (none of the regulations was identified as exceeding statutory authority). Included in the eight regulatory projects were the February 2016 proposed regulations (REG-129067-15) promulgated under section 103 on the definition of “political subdivision” for purposes of issuing tax-exempt municipal bonds.
The U.S. Treasury Department on October 4, 2017, released a final report with recommendations for specific actions to mitigate the burden imposed by regulations previously identified as either imposing an undue financial burden on taxpayers, or adding excessive complexity to the tax system. A related Treasury release states that the proposed regulations under section 103 would be withdrawn because:
“The new requirements would have imposed enhanced standards to show a governmental purpose and governmental control. The changes proposed by the regulations would have been costly and burdensome.”
© 2020 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
For more detail about the structure of the KPMG global organization please visit https://home.kpmg/governance.
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.