On August 7th, the MBFA submitted a comment letter on the IRS’ proposed political subdivision rule, which is currently being reviewed per the requirements of Executive Order 13789 that requires the Secretary of the Treasury to review temporary, proposed, or final IRS regulations issued between January 1, 2016, and April 21, 2017 — the date of the executive order. The letter urges the Treasury to rewrite or repropose the rule as it will add undue complexity and confusion to Federal Tax law for purposes of tax-exempt municipal bonds.
Specifically, Executive Order 13789 instructs Treasury to submit a report to the President by September 18, 2017, to make recommendations for action on the identified regulations, which:
- Impose an undue financial burden on U.S. taxpayers
- Add undue complexity to the Federal Tax law
- Exceed the statutory authority of the IRS
The proposed rule to redefine “political subdivision” was one of eight regulatory actions identified in the executive order for further review based on the criteria noted above.