The U.S. Department of the Treasury has proposed the repeal of nearly 300 tax regulations that are “unnecessary, duplicative or obsolete and force taxpayers to navigate needlessly complex or confusing rules.” Tax Regulations are issued by the Internal Revenue Service (IRS) and provide the official interpretation of the Tax Code.
The proposal is a follow-up to an Executive Order issued by President Trump on April 21, 2017, charging the Treasury with reviewing certain tax regulations to ensure that the tax system is “simple, fair, efficient, and pro-growth.” The April order did not attempt to tackle an overhaul of the entire Tax Regs system but rather targeted all significant tax regulations issued on or after January 1, 2016. Under the terms of the order, Secretary Steven T. Mnuchin had 150 days to “prepare and submit a report to the President” with his specific recommendations.
Nearly a year later, Treasury proposes to eliminate 298 tax regulations, which, according to Secretary Mnuchin “serve no useful purpose to taxpayers.” Those regulations fall into three categories:
- Regulations interpreting provisions of the Code that have been repealed;
- Regulations interpreting provisions that have been significantly revised and the existing regulations do not account for these revisions; and
- Regulations that are no longer applicable.
If that sounds like a lot of regulations post-January 1, 2016, it is. The Treasury Department subsequently explained that “in furtherance of the policies stated in Executive Order 13789, Executive Order 13771, and Executive Order 13777, Treasury and the IRS have initiated a comprehensive review, coordinated by the Treasury Regulatory Reform Task Force, of all tax regulations, regardless of when they were issued…”
The IRS did not immediately respond to a request for comment. However, according to the Treasury, these removals will streamline the Federal Tax Regulations; reduce the volume of regulations taxpayers need to review; and increase clarity of the tax law. Additionally, Treasury maintains that the removals are “unrelated to the substance of rules in the regulations.”
Removal of these regulations is “not intended to alter any non-regulatory guidance that cites to or relies upon these regulations” – you can imagine how that might muddle things considerably. An additional 79 tax regulations that refer to those regulations targeted for removal will be amended. In total, nearly 400 regulations will be affected.
I perused the list of proposed removals and amendments. It’s a lot of dense material to get through, especially if you cross-reference with the Tax Code sections. And here’s what I found: A number of the targeted Regs date back to 1986 tax reform – some as far back as the 1950s – with others applicable only to a single tax year. While I don’t know if this is the best use of already stretched IRS and Treasury resources at this time, overall, culling the Regs isn’t a terrible idea.
By law, the proposal is open to comment from taxpayers. Written or electronic comments and requests for a public hearing must be received by May 14, 2018. To send a written comment, mail to: CC:PA:LPD:PR (REG-132197-17), Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. If you’d prefer to hand-deliver your comments, you may do so between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-132197-17), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, NW, Washington, DC.
You can submit electronic comments via the Federal eRulemaking Portal at www.regulations.gov (REG-132197-17).
You can read the Treasury notice (67 pages downloads as a PDF) here.
