Getting Involved After the TCJA.

• Author: McLeish, Watson M.
• Position: Tax Cuts and Jobs Act of 2017

By Watson M. McLeish

Welcome to the first installment of a new (periodic) column in Tax Executive, through which I aim to share select insights and observations of interest to TEI members regarding the post-tax reform advocacy environment in Washington, D.C. The historic tax reforms enacted in Public Law 115-97, colloquially known as the Tax Cuts and Jobs Act (TCJA), have inspired many TEI members to become more involved in the Institute's advocacy activities. Those activities, in turn, have become increasingly focused on the administrative rulemaking process as the Treasury Department works to fulfill its statutory mandates to issue regulations and other guidance under the new law.

The TCJA contains seventy-nine explicit grants of regulatory authority to the Secretary of the Treasury, some of which are exceedingly broad in their delegation of policymaking discretion. Congress also left a number of significant gaps (and glitches) in the statute that warrant the exercise of Treasury's general authority to adopt "all needful rules and regulations" under Section 7805(a) of the Internal Revenue Code. It is only natural, therefore, that TEI members have become increasingly interested in the regulatory sausage-making process, which is the subject of my first column. In particular, I felt it worthwhile to share some observations about the new Memorandum of Agreement (MOA) between Treasury and the Office of Management and Budget (OMB) for the review of tax regulations under Executive Order 12866.

Background

On April 21, 2017, President Donald Trump ordered Treasury and OMB to review and, if appropriate, reconsider the scope and implementation of the existing exemption for certain tax regulations from the review process set forth in Executive Order 12866. Under that exemption, the review procedures of Executive Order 12866 were generally waived with respect to all tax regulations except legislative regulations that were "significant" as defined in the executive order (e.g., likely to have an annual effect on the economy of $100 million or more). A similar waiver applied with respect to revenue rulings, revenue procedures, legal determinations, and other similar ruling documents issued by the Internal Revenue Service.

The New MOA

On April 11, 2018, Treasury and OMB entered into a new agreement that supersedes--yet largely resembles--their preexisting arrangement for the review of tax regulations under Executive Order 12866. The new MOA provides the...