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Tax Reg Review Process Getting Longer Over Time

Posted on Aug. 6, 2019

The average time it takes for the Office of Management and Budget to review regulations related to the 2017 tax law has more than doubled since last year.

That trend may continue given that the project with the longest review period to date — proposed regulations on the advance payments rule in section 451(c) — still hasn’t been completed.

Those regs have been under review with OMB’s Office of Information and Regulatory Affairs for 116 days as of August 5.

The April 2018 memorandum of agreement between Treasury and OMB outlined how OIRA’s review process should operate and created timetables that have become increasingly meaningless for guidance related to the Tax Cuts and Jobs Act.

The memo provided that the OIRA review process for tax regulations should take 45 days, “subject to extensions mutually agreed upon by Treasury and OMB.” For TCJA-related guidance, an expedited review of 10 business days is available, but it’s also subject to extensions. OIRA’s website doesn’t provide information about when extensions have been granted or how long they might last.

The average review time for the 10 TCJA projects reviewed by OIRA in 2018 was about 21 days, but the average time so far for the 14 projects completed in 2019 is roughly 43 days.

Strong Start, Followed by Slowdown

The first TCJA project sent to OIRA — proposed rules on the section 965 transition tax — was one of the few projects to ever come in under the expedited deadline. The next three projects — on section 199A, state and local tax credits, and global intangible low-taxed income — all exceeded 10 business days, but only slightly.

Of the other six projects in 2018, four went over 20 days, but none exceeded the general 45-day limit.

However, that changed in 2019. The section 250 proposed regs on deductions for foreign-derived intangible income and GILTI were the first to go over 45 days, spending 69 days under review at OIRA.

The final SALT credit regulations and a related notice on section 164 and section 170(c) both spent 70 days at OIRA. Both the section 250 regs and the final SALT regs took an additional 13 days to be published.

The proposed rules on corporate built-in gains and losses were the first rules to spend over 100 days at OIRA, before being joined by the section 451(c) project. Those rules completed review on July 22 after 102 days but have yet to be released.

Along with the section 451(c) regs, proposed rules on revenue recognition under section 451(b) are also still in limbo at OIRA. Those regs recently eclipsed the 45-day mark. An IRS official said in May that both sets of section 451 proposed regulations would likely be released together.

OIRA has also reviewed eight non-TCJA tax projects since the memo was adopted. The average review time for those projects went down slightly in 2019 and has ranged from 15 days to 68 days.

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