Leaders of the House Ways and Means Committee raised concerns on Tuesday about proposed tax regulations and called for an extension of the public comment period.
The Treasury Department and the IRS released proposed regulations under section 385 of the Internal Revenue Code in April. The new regulations would treat certain related-party interests as stock rather than indebtedness for tax purposes and establish documentation requirements for certain related-party interests in a corporation.
U.S. Reps. Kevin Brady (R-TX), the chairman of the committee, and Charles Boustany (R-LA), the chairman of the Subcommittee on Tax Policy, raised concerns about the proposed regulations in a letter to Treasury Secretary Jack Lew on Tuesday.
“We believe any finalization of the proposed regulations in present form will have a profound and detrimental impact on business operations nationwide,” the legislators wrote. “If not significantly altered, they will undoubtedly reduce overall investment and economic activity to the detriment of the United States and its business community. Since the release of these proposed 385 regulations, strong concerns have been raised with our offices by constituent companies and business groups representing every economic sector and industry in the United States.”
The letter, which was signed by every Republican member of the House Ways and Means Committee, also said that the proposed regulations “represent a dramatic departure from current policy and practice” and would overturn a half-century of jurisprudence.
“The proposed regulations are broadly applicable to a wide array of ordinary business transactions, creating unacceptably high levels of uncertainty and adverse collateral consequences for non-tax motivated business activity,” the letter said.
U.S. Rep. Pat Tiberi (R-OH) said that he was concerned that the administration was moving too fast with sweeping regulations that would have a detrimental impact on the economy.
“I am not alone,” Tiberi said. “I have heard from countless companies in Ohio and businesses nationwide who have said that the proposed 385 regulations go too far and will hinder their ability to invest, grow and succeed here at home. Bottom line, we are asking the administration to slow down and listen to these substantial, bipartisan concerns before they move forward with putting an infected band-aid on a larger problem of our broken tax system.”