WASHINGTON – The Treasury Department and Internal Revenue Service are asking municipal market participants and others interested in tax issues for recommendations on what regulatory projects should be included in the agencies’ priority guidance plan for 2017-2018.

Treasury Department
The Treasury Department and Internal Revenue Service are asking what municipal bond projects should be on their priority guidance plan for 2017-2018. The U.S. Treasury Building.Image: Thinkstock

The recommendations must be submitted by June 1 to be considered for the plan, which will cover regulatory priorities from July 1, 2017 through June 30, 2018.

The latest priority guidance plan, for 2016-2017, contained seven regulatory projects but four of those have since been completed. They were an updated revenue procedure on management contracts, final rules for arbitrage investment restrictions, and final rules on issue price.

Of the remaining four projects, Treasury and IRS officials told bond lawyers meeting here in March that their latest priorities were to move toward issuance of final rules for public approval requirements for private activity bonds (the so-called TEFRA for Tax Equity and Fiscal Responsibility Act rules) and reissuance rules.

The TEFRA rules were proposed on Sept. 9, 2008 and, although reaction to them was mostly positive, they have never been finalized. Treasury and IRS officials have put out several guidance documents on reissuance – when the terms of a bond has been materially changed such that it is considered to be reissued as a new bond and subject to the latest tax laws and rules. They have been working on a project to modernize and possibly consolidate that guidance.

Also remaining in the plan is guidance on remedial actions for tax-advantaged rules as well as rules on political subdivisions. But the political subdivision rules, proposed on Feb. 23, 2016, drew so much opposition and complaints about burdens and complexity, that most sources do not see that regulatory project moving forward in the current administration given its penchant for simpler, user-friendly rules and deregulation.

In their request for recommendations for the 2017 and 2018 plan, Treasury and the IRS said that when selecting projects, they will consider whether the guidance: resolves significant issues relevant to many taxpayers; reduces controversy and lessons the burdens on taxpayers; can be easily understood and complied with by taxpayers; and promotes sound tax administration.

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