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Hatch Presses Lew For Regulatory 'Loophole' Memo

by Mike Godfrey,, Washington

03 May 2016

US Senate Finance Committee Chairman Orrin Hatch has written to Treasury Secretary Jacob Lew demanding a copy of an unpublished memorandum of understanding, dating back to 1983, which is said to have led to reduced tax rule transparency.

The Congressional Review Act requires all federal agencies to submit any major rule to Congress for review, before it takes effect. Major rules are defined as those likely to have an annual effect on the US economy of USD100m or more. The 1983 memorandum was reportedly exchanged between the Treasury Department and the Administration in 1983.

It is understood that the MoU in question has been used to allow tax regulations to bypass that requirement, by deeming the action to be the implementation of existing laws.

Hatch is reported to have pointed out in his letter that this has meant that the issuance of regulations by Treasury and the Internal Revenue Service have lacked transparency and hidden the real effect that they could have had on individuals and businesses.

The question of the MoU is considered to be particularly apposite with regard to the various regulations formulated since 2010 concerning the operation of the Affordable Care Act, and to the latest anti-tax inversion administrative rules issued by Treasury on April 4 this year. The latter could, it is feared, have the significant effect of reducing foreign direct investment in the United States.

TAGS: compliance | tax | investment | tax compliance | foreign direct investment (FDI) | law | ministry of finance | agreements | legislation | memorandum of understanding (MOU) | United States | regulation | Tax

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