Daily Tax Update - January 23, 2017: Regulatory Freeze Takes Effect

Regulatory Freeze Takes Effect:  White House Chief of Staff Reince Priebus sent a memorandum to the heads of executive departments and agencies directing a temporary regulatory freeze pending review.  The memorandum directs agency heads to refrain from sending regulations (subject to certain exceptions) to the Office of the Federal Register (OFR) until a department or agency head appointed by President Trump reviews and approves the regulation.  With respect to regulations that have been sent to the OFR but not published in the Federal Register, the memorandum directs agency heads to immediately withdraw the regulations from the OFR for review and approval.  Finally, with respect to regulations that have been published in the OFR but have not taken effect, the memorandum directs agency heads to, as permitted by applicable law, temporarily postpone the regulations’ effective date for 60 days from the date of the memorandum for the purpose of reviewing any questions of fact, law, and policy the regulations raise.

Several recently-released IRS regulations, including final regulations relating to US-source dividend equivalents, final regulations relating to the qualifying income exception for publicly traded partnerships, and proposed regulations relating to the new partnership audit regime have not yet been published in the Federal Register and likely will be affected by the regulatory freeze.

A similar memorandum was issued by the Bush and Obama Administrations in 2001 and 2009, respectively.

President Trump Signs Executive Order on Affordable Care Act:  On January 20, President Trump signed an executive order regarding the Patient Protection and Affordable Care Act (the ACA).  The executive order states that it is the administration’s policy to seek the “prompt” repeal of the ACA.  Pending repeal, the administration’s policy will be “to ensure that the law is being efficiently implemented.”  Among other things, the executive order directs agency heads to “waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the [ACA] that would impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications” to the maximum extent permitted by law.