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The former top Treasury official charged with overseeing the department’s work on the new tax code predicts that his abrupt departure won’t derail the regulatory process.
Dana Trier’s Feb. 23 exit comes as Treasury staff members wrestle with issuing regulations for the 2017 tax act, raising concerns that his absence will hamper the department’s ability to quickly release guidance on the new law.
As deputy assistant secretary for tax policy, Trier was the “key hub” in getting Internal Revenue Service guidance and regulations clarifying the tax law out the door, said Gregory F. Jenner, a former Treasury acting assistant secretary for tax policy and former deputy assistant secretary for tax policy.
His departure “can do nothing other than slow things down,” Jenner, a partner at Stoel Rives LLP in Washington, told Bloomberg Tax Feb. 26. “The question is: How much?”
Trier made controversial comments at the American Bar Association Section of Taxation meeting in San Diego on Feb. 9, which he said were the impetus for his departure. During a speech, Trier said certain provisions in the new law would be a “feast” for tax planning, and suggested Congress didn’t intend many of the unintended consequences in the final law, which Republicans consider to be their top legislative achievement in 2017.
Those remarks, Trier told Bloomberg Tax Feb. 26, made him “too much of the story” at Treasury, and “once the momentum developed, it was sad but it was just very clear that I had to go.”
Trier said his comments were geared toward specific provisions that he felt were underdeveloped in the new law, such as a provision limiting the carried interest tax break.
“It is true—in my honest moments and unfortunately that day, I was honest—that I think the carried interest provision for some reason is much less developed,” he said. However, Trier said most of the law, including many of the most significant domestic measures, is sophisticated and administrable.
Trier previously said Treasury planned to release proposed rules for nearly 30 priority projects by the end of June. While he doesn’t anticipate that his departure will hold up the department’s regulatory work, Trier said some guidance items are more likely than others to meet the June 30 deadline.
For example, it’s likely the government will be able to issue proposed regulations on the limitation on the deductibility of business interest expense under the newly amended tax code Section 163(j) in that time frame, he said. “There’s actually been a considerable amount of progress” there, Trier said.
Conversely, regulations on the pass-through provisions in the law are less likely to meet the deadline because they are much more complex, he said. “I don’t think my departure slows it down. I think it’s just the nature of the beast.”
Trier also said it’s likely practitioners won’t see regulations on the law’s new international provisions—including a requirement that U.S. shareholders of controlled foreign corporations pay tax on their global intangible low-taxed income (GILTI), the base erosion anti-abuse tax (BEAT), and the new provision on foreign-derived intangible income (FDII)—until fall at the earliest. Those concepts are novel, and much of the effort in the international area thus far has been focused on repatriation issues, he said.
Lisa M. Zarlenga, a partner with Steptoe & Johnson LLP in Washington and a former Treasury tax legislative counsel, said while Trier’s departure will be a hurdle for the implementation process, it won’t be insurmountable.
Both Zarlenga and Eric Solomon, a principal in Ernst & Young LLP’s National Tax Department in Washington and a former Treasury assistant secretary for tax policy, said that in the international space, Lafayette G. “Chip” Harter, deputy assistant secretary for international tax affairs, can pick up some of the slack.
House Ways and Means Committee Chairman Kevin Brady (R-Texas) told reporters Feb. 26 that Treasury had been moving at “full speed” since late last year and that wasn’t going to change. “I don’t see any change in that pace or in the discussions we’re having with them,” he said.
Brady, when asked if the Office of Management and Budget should review some of the tax regulations, said Treasury would be the main driver when it comes to reviewing the tax law. Sen. Ron Johnson (R-Wis.), chairman of the Homeland Security and Governmental Affairs Committee, and Sen. James Lankford (R-Okla.), chairman of the Subcommittee on Regulatory Affairs and Federal Management, have been questioning a decades-long agreement to exempt tax regulations from review by the White House’s Office of Information and Regulatory Affairs, which is part of the OMB.
Trier said it may be difficult for Treasury to immediately find his replacement given his experience implementing the Tax Reform Act of 1986 and his substantive knowledge on several aspects of the tax code—including corporate and pass-through taxation and international issues.
“I think I had my fingers in so many pots that it’s going to be a little tricky to completely replace me,” he said. However, “I think that the guidance process for tax reform will go on at a considerable pace” and that others in the department will rise to the task, he said.
Trier said he expects the Office of the Tax Legislative Counsel to play an increasing role in working on some of the domestic issues under the new tax law. On the international side, “people in both Treasury and the IRS are quite strong,” he said.
Treasury didn’t respond to requests for comment.
Since the Feb. 23 announcement, Trier said he has received emails from several large institutions, including Davis Polk & Wardwell LLP, where he previously worked on financial transactions and corporate mergers.
“Although it’s most likely I would go back home to Davis Polk, I will consider the other opportunities before I finally decide,” Trier said.
Trier said he has also been approached about teaching a law class on partnerships in the fall.
In the short term, he plans to publish several articles on substantive issues in the new tax law, such as the pass-through deduction under new code Section 199A. “I’d like to start that within a few days,” Trier said. He said the exercise may assuage some of the guilt he feels for his comments in San Diego.
Trier said he also has several speaking engagements lined up.
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