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Final Regs Remove Unnecessary Tax Rules

MAR. 14, 2019

T.D. 9849; 84 F.R. 9231-9239

DATED MAR. 14, 2019

DOCUMENT ATTRIBUTES

Institutional Authors
Internal Revenue Service
Subject Area/Tax Topics
Tax system administration
Jurisdictions
United States
Tax Analysts Document Number
2019-9093
Tax Analysts Electronic Citation
2019 TNT 48-15

Citations: T.D. 9849; 84 F.R. 9231-9239

Eliminating Unnecessary Tax Regulations

[4830-01-p]

DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 1, 5, 5c, 5f, 7, 11, 13, 16, 19, 20,
25, 31, 48, 49, 54, 55, 148, 301, 404, 601, and 602

Treasury Decision 9849

RIN 1545-BO17

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

SUMMARY: This document contains final regulations that remove from the Code of Federal Regulations 296 regulations that are no longer necessary because they do not have any current or future applicability under the Internal Revenue Code and amend 79 regulations to reflect the removal of the 296 regulations. The removal and amendment of these regulations may affect various categories of taxpayers by simplifying the Code of Federal Regulations.

DATES: These regulations are effective on March 14, 2019.

FOR FURTHER INFORMATION CONTACT: Emily Lesniak of the Office of the Associate Chief Counsel (Procedure and Administration), (202) 317-3400 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

This document contains final regulations removing from the Code of Federal Regulations (CFR) 296 regulations that are no longer necessary because they do not have any current or future applicability under the Internal Revenue Code and amending 79 regulations to reflect the removal of the 296 regulations.

On February 24, 2017, the President issued Executive Order 13777, Enforcing the Regulatory Reform Agenda (82 FR 12285). Executive Order 13777 directed each agency to establish a Regulatory Reform Task Force. Each Regulatory Reform Task Force was directed to review existing regulations for regulations that: (i) eliminate jobs, or inhibit job creation; (ii) are outdated, unnecessary, or ineffective; (iii) impose costs that exceed benefits; (iv) create a serious inconsistency or otherwise interfere with regulatory reform initiatives and policies; (v) are inconsistent with the requirements of the Information Quality Act (section 515 of the Treasury and General Government Appropriations Act of 2001) or OMB Information Quality Guidance issued pursuant to that provision; or (vi) derive from or implement Executive Orders or other Presidential directives that have been subsequently rescinded or substantially modified.

On April 21, 2017, the President issued Executive Order 13789, Presidential Executive Order on Identifying and Reducing Tax Regulatory Burdens (82 FR 19317). This executive order stated a policy that the “Federal tax system should be simple, fair, efficient, and pro-growth” and that “[t]he purposes of tax regulations should be to bring clarity to the already complex Internal Revenue Code . . . and to provide useful guidance to taxpayers.” Executive Order 13789 also directed that immediate action be taken to “reduce the burden existing tax regulations impose on American taxpayers and thereby to provide tax relief and useful, simplified tax guidance.” To further this goal, the executive order directed the Secretary of the Treasury to review all significant tax regulations issued on or after January 1, 2016.

As required by Executive Order 13789, on June 22, 2017, the Treasury Department issued an interim report (June report) identifying eight regulations to be revised or withdrawn. On October 2, 2017, the Treasury Department issued a second report (October report) recommending specific actions with respect to the regulations identified in the June report. In addition, in the October report the Treasury Department explained that “in furtherance of the policies stated in Executive Order 13789, Executive Order 13771, and Executive Order 13777, Treasury and the IRS have initiated a comprehensive review, coordinated by the Treasury Regulatory Reform Task Force, of all tax regulations, regardless of when they were issued. . . . This review will identify tax regulations that are unnecessary, create undue complexity, impose excessive burdens, or fail to provide clarity and useful guidance. . . .” In the October report, the Treasury Department noted that the IRS Office of Chief Counsel had already identified over 200 regulations for potential revocation. These regulations are in the CFR “but are, to varying degrees, unnecessary, duplicative, or obsolete, and force taxpayers to navigate unnecessarily complex or confusing rules.”

Pursuant to the policies stated in Executive Orders 13777 and 13789, on February 15, 2018, the Treasury Department and the IRS published in the Federal Register (83 FR 6806) a notice of proposed rulemaking proposing to remove from the CFR 298 regulations as having no current or future applicability and, therefore, no longer providing useful guidance, and to amend 79 regulations to reflect the proposed removal of the 298 regulations (the notice of proposed rulemaking). The Treasury Department and the IRS received comments on the notice of proposed rulemaking, but no public hearing was requested or held. After consideration of the comments, the Treasury Department and the IRS are in this Treasury decision finalizing the rules proposed in the notice of proposed rulemaking, with the revisions described below.

Summary of Comments and Explanation of Revisions

Five comments were submitted under the regulation number for the notice of proposed rulemaking. Of the five comments submitted, four are responsive to the notice of proposed rulemaking and are addressed below. All of the comments are available for public inspection at http://www.regulations.gov or upon request.

One comment agreed with the principles expressed in Executive Orders 13777 and 13789 and stated that the progress in response to the executive orders is greatly welcomed. The comment also asserted that the Background section of the notice of proposed rulemaking stated that the regulations in the notice result from examination of a small sample of all regulations composed only of those “significant” regulations issued on or after January 1, 2016. The Treasury Department and the IRS, however, note that while the Background section to the notice of proposed rulemaking references significant tax regulations issued on or after January 1, 2016, when describing Executive Order 13789, nothing in the Background section or elsewhere in the notice of proposed rulemaking states that the 298 regulations proposed to be removed or the 79 regulations proposed to be amended are comprised only of such regulations. In the October report (as quoted in the Background section of the notice of proposed rulemaking), the Treasury Department described review “of all tax regulations, regardless of when they were issued. . . .”

The remaining responsive comments recommend the removal of various Treasury Regulations, including Treasury Regulation §1.809-3. Treasury Regulation §1.809-3 was proposed to be removed by the notice of proposed rulemaking, and these final regulations remove it from the CFR. However, because none of the other regulations discussed in the comments were proposed to be removed by the notice of proposed rulemaking, these comments are beyond the scope of these final regulations to the extent they discuss regulations other than Treasury Regulation §1.809-3. The Treasury Department and the IRS continue to consider which, if any, additional regulations ought to be removed or amended pursuant to the executive orders.

These final regulations do not remove Treasury Regulations §§1.921-1T and 1.921-2, which were proposed to be removed from the CFR in the notice of proposed rulemaking. The Treasury Department and the IRS have determined that these regulations should not be removed from the CFR because the regulations are cross-referenced in other regulations with continuing effect, and the cross references are important to the content of the other regulations.

Special Analyses

These regulations are not subject to review under section 6(b) of Executive Order 12866 pursuant to the Memorandum of Agreement (April 11, 2018) between the Treasury Department and the Office of Management and Budget regarding review of tax regulations. Because the final regulations would not impose a collection of information on small entities, an analysis under the Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required.

Pursuant to section 7805(f) of the Internal Revenue Code, the notice of proposed rulemaking that preceded these final regulations was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small businesses. No comments were received on the proposed regulations.

Drafting Information

The principal author of these regulations is Mark A. Bond of the Office of the Associate Chief Counsel (Procedure and Administration).