Identifying and Reducing Tax Regulatory Burdens
Signed: April 21, 2017
Published: April 26, 2017
Document Number: 2017-08586
📋Summary
This executive order directs the Treasury Department to review major tax regulations issued on or after January 1, 2016, and identify which ones create undue costs, add unnecessary complexity, or go beyond the IRS’s legal authority. It affects taxpayers and businesses indirectly by targeting rules that Treasury says increase compliance burdens, and it directly tasks the Treasury Secretary, the IRS, and the Office of Management and Budget with the review and follow-up actions. Within 60 days, Treasury must deliver an interim list of problematic regulations to the President, and within 150 days it must submit and publish a report recommending specific fixes. Treasury is instructed, where allowed by law, to delay or suspend effective dates and to modify or repeal identified regulations, and to publicly report the actions it takes. The order also calls for reconsidering a longstanding exemption that has kept some tax regulations from standard federal regulatory review, and for updating IRS internal guidance if needed to carry that out.
💼Business Impact
This order primarily affects businesses with complex tax reporting and exposure to “significant” Treasury/IRS regulations issued since Jan. 1, 2016—especially financial services, multinational companies, pass-through entities, and firms in highly regulated sectors that rely on detailed IRS guidance (e.g., healthcare, energy). It creates an opportunity for reduced compliance costs or delayed/suspended rules, but also introduces near-term uncertainty as regulations may be modified or rescinded through notice-and-comment, potentially changing filing positions, documentation standards, or penalty exposure. Managers should inventory which post-2016 tax regs materially affect their filings (and where they drive forms, systems, or controls), monitor Treasury/IRS Federal Register actions closely, and be ready to adjust tax positions and compliance processes quickly—while avoiding aggressive interpretations until changes are finalized. Consider submitting comments during rulemaking and coordinating with your tax advisors to model cash-tax and reporting impacts under both “current rule” and “rollback” scenarios.
Full Text
Executive Order 13789 of April 21, 2017
Identifying and Reducing Tax Regulatory Burdens
By the authority vested in me as President by the Constitution and the laws of the United States of America, it is hereby ordered as follows:
Section 1 . Policy. The Federal tax system should be simple, fair, efficient, and pro-growth. The purposes of tax regulations should be to bring clarity to the already complex Internal Revenue Code (title 26, United States Code) and to provide useful guidance to taxpayers. Contrary to these purposes, numerous tax regulations issued over the last several years have effectively increased tax burdens, impeded economic growth, and saddled American businesses with onerous fines, complicated forms, and frustration. Immediate action is necessary to reduce the burden existing tax regulations impose on American taxpayers and thereby to provide tax relief and useful, simplified tax guidance.
Sec. 2 . Addressing Tax Regulatory Burdens. (a) In furtherance of the policy described in section 1 of this order, the Secretary of the Treasury (Secretary) shall immediately review all significant tax regulations issued by the Department of the Treasury on or after January 1, 2016, and, in consultation with the Administrator of the Office of Information and Regulatory Affairs, Office of Management and Budget, identify in an interim report to the President all such regulations that:
(i) impose an undue financial burden on United States taxpayers;
(ii) add undue complexity to the Federal tax laws; or
(iii) exceed the statutory authority of the Internal Revenue Service.
This interim report shall be completed no later than 60 days from the date of this order. In conducting the review required by this subsection, earlier determinations of whether a regulation is significant pursuant to Executive Order 12866 of September 30, 1993, as amended (Regulatory Planning and Review), shall not be controlling.
(b) No later than 150 days from the date of this order, the Secretary shall prepare and submit a report to the President that recommends specific actions to mitigate the burden imposed by regulations identified in the interim report required under subsection (a) of this section. The Secretary shall also publish this report in the Federal Register upon submitting it to the President. The Secretary shall take appropriate steps to cause the effective date of such regulations to be delayed or suspended, to the extent permitted by law, and to modify or rescind such regulations as appropriate and consistent with law, including, if necessary, through notice and comment rulemaking. The Secretary shall submit for publication in the Federal Register a summary of the actions taken in response to the report no later than 10 days following the finalization of such actions. Should all such actions not be finalized within 180 days following the submission of the report to the President, the Secretary shall submit for publication in the Federal Register an initial report summarizing the actions taken to that point.
(c) To ensure that future tax regulations adhere to the policy described in section 1 of this order, the Secretary and the Director of the Office of Management and Budget shall 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 and any successor order. ( printed page 19318)
(d) The Secretary shall cause section 32.1.5.4.7.5.3 of the Internal Revenue Manual to be revised, if necessary to fulfill the directives in subsection (c) of this section.
Sec. 3 . General Provisions. (a) Nothing in this order shall be construed to impair or otherwise affect:
(i) the authority granted by law to an executive department or agency, or the head thereof; or
(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.
(b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.
(c) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.
THE WHITE HOUSE,
April 21, 2017.