For over 50 years, Bloomberg BNA’s renowned flagship daily news service, Daily Tax Report® has helped leading practitioners and policymakers stay on the cutting edge of taxation and...
Nov. 15 — Many Obama-era tax regulations—including controversial earnings-stripping rules—could be headed for the chopping block or not even make it out the door under President-elect Donald Trump, former Treasury officials said.
Tax guidance could be in peril under Trump, who has pledged to yank most of the regulations created under President Barack Obama, the former officials said at a Nov. 15 conference. Prominent rules on estate valuation, spinoffs and intellectual property transfers may be at risk of not getting finished, they said.
The unpopular debt-equity rules, intended to curb multinational companies from shifting income out of the U.S., could be a prime target.
“My prediction is that it doesn’t survive,” said Lisa Zarlenga, former tax legislative counsel in Treasury’s Office of Tax Policy. “It will be withdrawn by the next administration.”
Pressure on Trump to yank the tax code Section 385 rules is likely to come not only from corporations but from Capitol Hill. “I’m hopeful that he stops those regulations cold,” House Ways and Means Committee Chairman Kevin Brady (R-Texas) said at a post-election conference held by Bloomberg BNA and KPMG LLP. He did not say whether Congress would take action against the rules, which call for recasting some loans to offshore subsidiaries as equity rather than tax-favored debt.
Even though the final version of the rules lifts most of the burden from U.S. multinationals, Brady said, “they’re still damaging to the economy,” and likely would act as a wall to keep investment out of the U.S.
Zarlenga, now a partner with Steptoe & Johnson LLP, said while the government has to explain why it’s pulling rules under the Administrative Procedure Act, the dozens of comments sharply criticizing the Section 385 rules would provide plenty of backup. Greg Jenner, who has served as both acting assistant Treasury secretary for tax policy and deputy assistant secretary for tax policy, said, “there’s too much weight behind revocation for it to last.”
The former officials said they aren’t just concerned about the fate of existing regulations under a Trump presidency. The future of some big guidance still under construction in the current Treasury Department—much needed by business taxpayers—is looking less certain, they said.
Jenner, now a partner at Stoel Rives LLP, said there may be a last-minute push at Treasury to get out some significant regulations. But Zarlenga said it is her understanding that right now, “there’s more of a mandate to put their pens down because the new administration is going to freeze and pull and yank. There’s going to be a slowdown.”
In a future where even new guidance is likely to face big obstacles, the Trump administration may be more willing to listen to Congress, according to Joe Mikrut, former acting assistant Treasury secretary for tax policy.
With lawmakers sending increasing numbers of letters to Treasury to take aim at regulations, “you may see more of that,” Mikrut said. “As the incoming administration determines what to do, I think they’ll take those letters into account.”
To contact the reporter on this story: Alison Bennett in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Meg Shreve at email@example.com
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)