On behalf of President Trump, new White House Chief of Staff, Reince Priebus, issued a memorandum describing a “regulatory freeze” that places a moratorium on all federal rule making, except in limited situations, until the new administration can review all the regulations in process. While the breadth and reach of this “freeze” on the issuance of new regulations is unprecedented, and in keeping with President’s promise to eliminate “over-regulation”, it is not unusual to have a new administration pull back on regulatory projects in progress to allow time for reassessment. This is especially true when the new administration represents a change in parties, as well.
Under the mandate of the memorandum, regulations that have already been filed with the Office of the Federal Register (OFR) but not yet published will be withdrawn for review and approval, and the effective date of regulations that have been published but are not yet effective will be postponed for 60 days from the date of the memo (January 20, 2017).
Note that among these proposed regulations that will now be withdrawn for review and approval are those regulations modifying the 2704(b) regulations that were published in the Federal Register in early August. Those regulations were the subject of several earlier posts and were felt to be very onerous in the realm of estate and gift planning and intra-family transfers of business ownership interests. The planning community and family business owners generally viewed the proposed new rules as severely limiting the use of valuation discounts in determining the value of family business ownership interests and thereby increasing the transfer tax obligations significantly on these intra-family transfers.
It now appears that the regulations will be withdrawn in accordance with Mr. Priebus memorandum. The subject of a special hearing before the Internal Revenue Service on December 1st, at which this author testified, the 2704(b) regulations drew a substantial negative response. From the perspective of that meeting, it seems likely that the proposed rules will now be permanently withdrawn. That is good news for taxpayers owning family businesses!
Other regulations that are affected by this memorandum include the final, temporary, and proposed dividend equivalent regulations, the final regulations on the master limited partnership qualifying income, and the proposed regulations on the new centralized partnership audit regime.
The reach of the mandate covers all regulations issuing executive departments and agencies. Exceptions are to be provided by the Acting Director of the Office of Management and Budget for emergency situations or other urgent circumstances relating to health, safety, financial, or national security matters, or otherwise.
Related posts:
Bob Grossman’s Testimony at Treasury’s Public Hearing
Testifying at Treasury on the Proposed §2704(b) Regulations
IRS Proposed Regulations to Chart New Course for Gift and Estate Tax Valuations
