United States

Trump administration halts federal rulemaking including tax rules


In one of the first actions of the new Trump administration, White House Chief of Staff Reince Priebus issued a memorandum to all executive departments and agencies ordering several halts or delays to federal regulation activity. This is a similar action to one taken in 2009 in the early days of the Obama administration, and allows for Trump appointees to review all regulations currently in process.

Per the memorandum, no new final, temporary or proposed regulations are to be sent to the Federal Register (where all regulation activity must be published to be effective), and any regulations that have been sent to the Federal Register but not yet published are to be withdrawn by the submitting agency. Finally, any regulations that have been published, but is not yet effective, is to have its effective date delayed (if possible) by 60 days. Certain regulations relating to health, safety, financial or national security matters can be exempted, but it is generally believed that this exception will not apply to tax regulations.

Although many regulation projects were finalized in the waning days of the Obama administration, there are some regulations (either proposed, temporary or final) that were made publicly available that nevertheless were not sent to the Federal Register prior to the freeze, and thus, will not take effect. Included in this category are the hotly anticipated proposed regulations on the new partnership audit rules, which were made available Jan. 18 but not sent to the Federal Register prior to Jan. 20.

It was initially expected that several other pronouncements that were made available last week but not due to be published in the Federal Register until Jan. 24, to include final and temporary regulations governing dividend equivalents under section 871(m) and final regulations defining qualifying income for publicly traded partnerships, would be withdrawn. However, as of the time of this writing, both pronouncements did appear in the Federal Register on Jan. 24.

Although some announced regulations have been suspended, it is entirely possible that they will be re-released unchanged after the new administration’s review is complete. Nevertheless, taxpayers and practitioners should be wary of placing reliance on regulations affected by the freeze.

We are closely monitoring tax reform developments and how they may affect the middle market.  Read more


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