The Treasury Department has proposed to repeal nearly 300 tax regulations, many of which have become obsolete with the passage of the new tax law and earlier legislation, in some cases dating back to 1942.
Last April, President Trump signed an executive order directing the Treasury to review the existing regulations and make sure they fostered a simpler tax system. The Treasury released a notice of proposed rulemaking Tuesday for eliminating unnecessary tax regulations as a result of that review. The Treasury said the 298 tax regulations are unnecessary, duplicative or obsolete and force taxpayers to navigate needlessly complex or confusing rules. In addition, the Treasury is proposing to amend 79 regulations to reflect the proposed removal of the 298 regs.
“We continue our work to ensure that our tax regulatory system promotes economic growth,” said Treasury Secretary Steven T. Mnuchin in a statement. “These 298 regulations serve no useful purpose to taxpayers and we have proposed eliminating them. I look forward to continuing to build on our efforts to make the regulatory system more efficient and effective.”
The regulations proposed to be repealed fall into three categories:
1. Regulations interpreting provisions of the Code that have been repealed;
2. Regulations interpreting provisions that have been significantly revised and the existing regulations do not account for these revisions; and
3. Regulations that are no longer applicable.
They include regulations provide guidance regarding the tax exemption for dividends from shares and stock of federal agencies or
Instrumentalities, and regulations providing guidance relating to the nonexemption of Communist-controlled organizations.
“I think they were identified as dead wood,” said Todd Simmens, national tax partner at BDO USA. “Looking at the categories, they’re ones that based on changes in the law had no application, or were unduly burdensome, etc. That’s what they seem to be going for in this project.”
Trump signed an executive order last year calling for the elimination of two regulations for every new regulation introduced, and the list may provide the Treasury and the IRS with some extra space for drawing up new regulations for implementing the new Tax Cuts and Jobs Act.
“To me it’s less important if it’s the two-for-one or another project,” said Simmens. “The question for me is how are they going to identify them, and what will be the impact.”
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