Bicameral, Bipartisan Lawmakers Urge Treasury to Revisit Proposed Debt-Equity Regulations

CCH Tax Day Report

Both Republican and Democratic lawmakers in the House and Senate have voiced concern recently over the Treasury Department’s proposed Code Sec. 385 debt-equity regulations (NPRM REG-108060-15, I.R.B. 2016-17, 636; TAXDAY, 2016/04/05, I.5). Lawmakers have consistently expressed concern that as the proposed regs stand, American businesses could be negatively impacted.

House Ways and Means Committee Republicans sent Treasury Secretary Jack Lew a second letter on August 22 requesting a complete overhaul of the proposed regs published in April. Their first letter expressing such concern was sent in June (TAXDAY, 2016/06/29, C.1)

Ways and Means Democrats also sent a letter to Lew on June 22 stating their similar concerns. Democratic lawmakers wrote they were concerned of potential “unforeseen circumstances” adversely affecting business transactions because of the proposed regulations.

House and Senate taxwriters held a bipartisan meeting in July with Treasury officials regarding the proposed regulations. “As we stressed during our July 6 discussion, any proposal that would effectuate such a broad change to the U.S. tax law should be analyzed for the potential effects on the American economy before any finalization,” Republican Ways and Means Committee lawmakers wrote on August 22.

Senate Finance Committee Chairman Orrin G. Hatch, R-Utah, also sent a letter addressing the proposed regulations to Lew on August 22. Hatch asked the Treasury to re-propose the Code Sec. 385 regs. “Finalizing the regulations, without another round of proposed regulations, would be imprudent,” he wrote.

By Jessica Jeane, Wolters Kluwer News Staff

Ways and Means Press Release—New W&M GOP Letter to Treasury: Proposed Regs Will Hurt U.S. Economy, Stifle Job Creation at Home

Ways and Means GOP Letter to Treasury Regarding Code Sec. 385 Regs

SFC Press Release: Hatch Calls on Treasury to Re-Propose Debt-Equity Rules

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