On July 7, 2017, the IRS issued Notice 2017-38 outlining recent regulations that it identified as requiring review pursuant to Executive Order 14789 (April 21, 2017). Of 105 sets of regulations that have been issued since January 1, 2016, 53 were deemed minor or technical and not required to be addressed under EO 13789. The remaining 52 issuances were reviewed by the IRS and Treasury Department. Eight (8) sets of regulations were identified as warranting further review in order to comply with the EO. The eight areas identified were as follows:
- Proposed Regulations under Section 103 on Definition of Political Subdivision (REG-129067-15; 81 F.R. 8870)
- Temporary Regulations under Section 337(d) on Certain Transfers of Property to Regulated Investment Companies (RICs) and Real Estate Investment Trusts (REITs) (T.D. 9770; 81 F.R. 36793)
- Final Regulations under Section 7602 on the Participation of a Person Described in Section 6103(n) in a Summons Interview (T.D. 9778; 81 F.R. 45409)
- Proposed Regulations under Section 2704 on Restrictions on Liquidation of an Interest for Estate, Gift and Generation-Skipping Transfer Taxes (REG-163113- 02; 81 F.R. 51413)
- Temporary Regulations under Section 752 on Liabilities Recognized as Recourse Partnership Liabilities (T.D. 9788; 81 F.R. 69282)
- Final and Temporary Regulations under Section 385 on the Treatment of Certain Interests in Corporations as Stock or Indebtedness (T.D. 9790; 81 F.R. 72858)
- Final Regulations under Section 987 on Income and Currency Gain or Loss With Respect to a Section 987 Qualified Business Unit (T.D. 9794; 81 F.R. 88806)
- Final Regulations under Section 367 on the Treatment of Certain Transfers of Property to Foreign Corporations (T.D. 9803; 81 F.R. 91012)
These eight sets of regulations were deemed to potentially be in conflict with the first two requirements of EO 13789; that is, they may pose an undue financial burden on taxpayers, and/or they may add “undue complexity” to federal tax laws. The IRS and Treasury apparently did not identify any regulations that exceeded its authority – the third requirement of the EO.
A further report is due September 18, 2017, outlining recommendations for remediation to bring the regulations into compliance with the requirements of EO 13789.