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Tax Reform: Busy Start to Trump Administration Bodes Major Changes Are on the Way

In the first few weeks of the Trump administration, we have seen several indications that tax lawyers are going to be busy keeping up with the shifting sands of tax reform.

We learned from an Executive Order released on January 30, 2017 that for every new regulation that will be issued, two regulations must be eliminated In a release on February 2, 2017, the Office of Management and Budget (OMB) clarified the edict explaining that it applies only to significant regulatory actions issued between January 20 and September 30, 2017.  This would apply to any regulation that:  (1) has annual effect on the economy of $100 million or more or adversely affects the economy; (2) created serious inconsistencies or otherwise interferes with action taken or planned by another agency; or (3) raises a novel legal or policy issue.

Officials at the Internal Revenue Service (IRS) have stated that the IRS will not issue much guidance in the near future, but will be focusing its limited resources on comprehensive tax reform. Accordingly, other than necessary releases (for example, monthly interest rates), we expect based on comments from the IRS that there will be a substantial slow-down in the issuance of revenue rulings, revenue procedures and other types of published guidance. However, the IRS will continue to release private guidance, such as private letter rulings and chief counsel advice memoranda. Indeed, the IRS has indicated that it will look to open up the process for private letter rulings, and is seeking input from practitioners regarding important subjects.

In other news, the Senate last night confirmed Steven Mnuchin as the Secretary of the Treasury by a narrow margin of 53-47. With a new captain at the helm, and the Trump Administration’s stated desire for major tax reform, we expect a new direction for Treasury and substantial resources devoted to what our tax system may look like in the future.

Point: It remains to be seen how the recent Executive Order will impact guidance from the Treasury and IRS, but all signs point to a slow-down in the issuance of published guidance. We expect that with less guidance, there is a potential for more controversy. For the foreseeable future, taxpayers and their advisors should to continue to monitor these new developments and how it may impact their operations.

© 2017 McDermott Will & Emery

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About this Author

Partner

Andrew R. Roberson is a partner in the law firm of McDermott Will & Emery LLP and is based in the Firm’s Chicago office.  Andy specializes in tax controversy and litigation matters, and has been involved in over 30 matters at all levels of the Federal court system, including the United States Tax Court, several US Courts of Appeal and the Supreme Court. 

Andy also represents clients, including participants in the CAP program, before the Internal Revenue Service Examination Division and Appeals Office, and has been successful in settling...

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Partner

Kevin Spencer is a partner in the law firm of McDermott Will & Emery LLP and is based in the Firm's Washington, D.C., office.  He focuses his practice on tax controversy and litigation issues.

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