U.S. Reps. Kevin Brady (R-TX) and Pat Tiberi (R-OH) said on Thursday that they plan to “carefully review” finalized section 385 regulations recently handed down by the Treasury Department and IRS.
Section 385 regulations, which were proposed by Treasury Secretary Jacob Lew in April, address whether direct or indirect interest in a corporation is treated as stock, debt or a combination of both for tax purposes.
“American businesses and members of Congress from both sides of the aisle have repeatedly asked the administration to slow down and do the work necessary to ensure that final regulations under section 385 will not damage our economy and hurt American workers,” Brady, the chairman of the House Ways and Means Committee, said. “By rushing the review process — despite the extensive comments received — and finalizing these regulations so quickly, it appears that the Obama administration has ignored the real concerns of people who will be most impacted by these far-reaching rules.”
Brady previously argued that exclusions and exceptions needed to be made under section 385 regulations for cash pooling arrangements, broader cash management practices, S corporations and equity compensation packages.
“I am going to carefully review these final regulations in the days ahead and hear directly from people across America about how these rules will impact our workers, our job creators and our communities,” Brady said. “With Americans already suffering through the worst economic recovery since World War II, our country simply cannot afford more Washington red tape that will discourage economic growth and make it even harder for Americans to get ahead. Republicans will continue to do everything possible to protect American workers and create an environment that encourages economic growth.”
Tiberi, a member of the House Ways and Means Committee, said that he, too, would carefully review the finalized regulations.
“A great number of groups and stakeholders warned the Obama administration that their proposed regulations went too far and threatened businesses’ ability to invest and create jobs here at home — particularly in Ohio,” Tiberi said. “I remain concerned that these one-off regulations will hold back robust growth. As I’ve always said, the strongest step we can take to grow our economy and knock down barriers to investment is by comprehensive reform of our broken tax code.”