Indiana Senator Concerned About Proposed Debt-Equity Regs

I am writing in regard to the Treasury Department's proposed regulations (REG-108060-15) under tax code Section 385, which are intended to crack down on tax inversions and earnings stripping. While I fully support Treasury's stated intentions, I am concerned that the proposed regulations could unintentionally restrict the ability of domestic companies to conduct ordinary business transactions.

There has been a troubling increase in the number of tax inversions in recent years, and I applaud your efforts to stop this manipulation of our tax code. It is important, however, that as this complex proposal is finalized, Treasury fully considers any unintended consequences that could inadvertently hinder domestic investment.

I was pleased by recent comments from Treasury officials indicating that revisions to the rule are expected. I encourage you to address concerns regarding transition rules, the tax status of S corporations, and the ability of companies to conduct cash pooling and foreign to foreign subsidiary transactions, while working to strongly discourage the practice of corporate inversions.

Once again, as you proceed in this rulemaking process, please ensure that the final rule does not unnecessarily constrain domestic investment and economic growth.