Overview
Tax Notes quoted Steptoe partners Lisa Zarlenga and Mark Silverman in an October 3 article titled “Hints as Final US Debt-Equity Regs Reach Final Review Stage.” The article discusses the section 385 debt-equity regulations, which were submitted for Office of Management and Budget (OMB) review on September 30. Regulations are deemed economically significant if they're estimated to have an annual effect of $100 million or more on the economy. The OMB estimated that the section 385 regulations would result in an additional $843 million in corporate tax revenue coming into the federal government each year, at least through 2026.
At a recent meeting of the ABA Section on Taxation, Ms. Zarlenga said that because the government thinks the final section 385 regulations aren't economically significant, that "means, at least in the government's view, there were sufficient changes made in the final regulations which made it less than $100 million." She noted that the government rarely takes the position that tax regulations are economically significant "because the economic significance derives from the statute, not the regulations."
Mr. Silverman suggested that it could also mean that only a portion of the proposed regulations are being finalized. Ms. Zarlenga said while that's a possibility, "I would think if they were reproposing part of it, they would have also submitted the proposed regulation part of the package to OIRA as well."
The full article can be read at Tax Notes (subscription required).
Ms. Zarlenga was also quoted on the same topic in an October 4 article in Bloomberg BNA.
