Daily Tax Update - July 7, 2017: Treasury Releases Guidance Identifying Regulations for Burden Reduction

Treasury Releases Guidance Identifying Regulations for Burden Reduction:  Today the Treasury Department released Notice 2017-38, which describes Treasury's review of significant tax regulations as directed by Executive Order 13789 and the regulations identified for burden reduction. Executive Order 13789, issued on April 21, 2017, instructed the Secretary of the Treasury to review all “significant tax regulations” issued on or after January 1, 2016 and to submit a 60-day interim report identifying regulations that impose an undue financial burden on US taxpayers, add undue complexity to the federal tax laws, or exceed the IRS’s statutory authority. A final report recommending specific actions to mitigate the burden imposed by the regulations identified in the interim report must be submitted by September 18, 2017.

The notice states that from January 1, 2016 through April 21, 2017, Treasury and the IRS issued 105 temporary, proposed, and final regulations. Fifty-three of the 105 regulations issued during this review period are minor or technical in nature and generated minimal public comment. Treasury treated the remaining 52 regulations as potentially significant and reexamined all of them.

Based on that reexamination, Treasury identified the following eight regulations for which Treasury intends to propose reforms—potentially ranging from streamlining problematic provisions to full repeal:

  • Proposed regulations under section 103 on the definition of political subdivision
  • Temporary regulations under section 337(d) on certain transfers of property to regulated investment companies (RICs) and real estate investment trusts (REITs)
  • Final regulations under section 7602 on the participation of a person described in section 6103(n) in a summons interview
  • Proposed regulations under section 2704 on restrictions on liquidation of an interest for estate, gift, and generation-skipping transfer taxes
  • Temporary regulations under section 752 on liabilities recognized as recourse partnership liabilities
  • Final and temporary regulations under section 385 on the treatment of certain interests in corporations as stock or indebtedness
  • Final regulations under section 987 on income and currency gain or loss with respect to a section 987 qualified business unit
  • Final regulations under section 367 on the treatment of certain transfers of property to foreign corporations

Comments regarding whether the regulations described in the notice should be rescinded or modified (and in the latter case, how the regulations should be modified) in order to reduce burdens and complexity are due by August 7, 2017.