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The executive order requiring the eliminatation of two prior tax regulations for every new tax regulation could significantly impact federal tax law.

Tax Regulations Impacted by New Executive Order

On January 30, President Trump signed an executive order requiring government agencies to identify two prior regulations for elimination for every new regulation issued.  This follows a January 20 memorandum from the White House freezing all new and proposed regulations.

The definition of “regulation” in the order is rather broad – “an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or to describe the procedure or practice requirements of an agency….” There are limited exclusions, one of which is “any other category of regulations exempted by the Director” of the Office of Management and Budget (“OMB”).

On its face, the order would appear to be potentially broader to cover revenue rulings and revenue procedures (and other IRS and Treasury guidance) as well.  Further clarification will be required.  Perhaps the IRS could obtain some type of waiver from OMB, but that would seem to be inconsistent with the intent of the order, which is in part to reduce government regulation.

The impact of this order on the orderly administration of federal tax law could be significant.

Richard Shapiro, Tax Director and member of EisnerAmper’s Financial Services and Corporate Tax Groups, has more than 40 years’ experience in federal income taxation, including the taxation of financial instruments and transactions, both domestic and international, corporate taxation and mergers and acquisitions.

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