CCH Tax Day Report
Lawmakers from both parties have reacted to the package of regulations under Code Sec. 385 released late on October 13 (T.D. 9790, NPRM REG-130314-16; TAXDAY, 2016/10/14. I.9). The proposed regulations, issued in April (NPRM REG-108060-15, I.R.B. 2016-17, 636; TAXDAY, 2016/04/05, I.5) received significant attention from lawmakers on a bipartisan scale over the last several months.
“Since the day the regulations were first proposed, the Treasury Department has heard pointed concerns from both Republicans and Democrats, and from numerous American job creators and a wide variety of sectors across the U.S. economy, that proceeding with the rules would be ill-advised and lead to unintended consequences for America’s innovators,” Senate Finance Committee (SFC) Orrin G. Hatch, R-Utah, said in an October 13 statement. Just three days before the IRS’s finalization of the debt-equity regulations, Hatch had written to Treasury Secretary Jack Lew seeking a delay in finalizing the regulations (TAXDAY, 2016/10/12, C.1).
SFC ranking member Ron Wyden, D-Ore., however, predicted the regulations “will go a long way to protecting our corporate tax base.” He added, “What this does not change is the need for tax reform.”
House members also reacted to the final regulations. “American businesses and members of Congress from both sides of the aisle have repeatedly asked the administration to slow down and do the work necessary to ensure that final regulations under Code Sec. 385 will not damage our economy and hurt American workers,” Ways and Means Chairman Kevin Brady, R-Tex., said. Likewise, Rep. Pat Tiberi, R-Ohio, weighed in on the regulations, saying, “I remain concerned that these one-off regulations will hold back robust growth.”
Ways and Means ranking member Sander Levin, D-Mich., however, stated that he believes the regulations “rightly made sensible changes,” and were a direct result from Republican inaction. “These regulations are another significant step the administration has taken to restore fairness to the tax system and ensure multinational corporations pay their fair share of taxes,” Levin said in a statement released the same day.
Republican and Democratic lawmakers alike, although disagreeing on the issuance of the debt-equity regulations, have consistently expressed the need for tax reform. “The strongest step we can take to grow our economy and knock down barrier to investment is by comprehensive reform of our broken tax code, ” Tiberi said.
By Jessica Jeane, Wolters Kluwer News Staff