Regulation cutoff will not affect most IRS rules | AccountingWEB

Regulation cutoff will not affect most IRS rules

A Treasury Department spokesperson has said that the White House memorandum issued on May 9 directing agency heads to propose new regulations by June 1 and finalize these regulations by November 1, 2008 will not apply to the Internal Revenue Service (IRS), CCH reports. Speaking with CCH on May 29, 2008 the spokesperson said that, "Generally, we believe the White House directive does not affect our normal process of issuing business plan guidance."

The memorandum does not expressly exclude the IRS, however, CCH says, and could impact joint guidance projects of the IRS and other federal agencies, including the Department of Labor's Employee Benefits Security Administration (EBSA) and the Pension Benefit Guaranty Corporation (PBGC). A PBGC spokesperson told CCH on June 6, 2008, that the White House memorandum applies to the PBGC.

W. Thomas Reeder, benefits counsel, Office of the Treasury Assistant Treasury for Tax Policy, speaking at the Profit Sharing/401(k) Council of America's 2008 Legislative and Regulatory Outlook conference in Washington, D.C., said on June 4, according to CCH, that the Treasury Department and the IRS are working to finalize Code Sec. 401(a)(9) regulations for government plans, Code Sec. 402(f) notices, and guidance on Code Sec. 404(k) dividends. "These projects are not subject to the Bolten memorandum," Reeder said.

Issued by White House Chief of Staff Joshua B. Bolten, the memorandum tells federal agency heads that, "Except in extraordinary circumstances, regulations to be finalized in this Administration should be proposed no later than June 1, 2008 and final regulations should be issued no later than November 1, 2008." Bolten did not define "extraordinary circumstances," The New York Times reports.

In his memo, Bolten wrote that the government should "resist the historical tendency of administrations to increase regulatory activity in their final months. . . . We must recognize that the burden imposed by new regulations is cumulative and has a significant effect on all Americans."

Many regulations do not take effect until 60 days after they have been issued and a new administration can act to postpone or freeze them, the Times reports. When they took office, both Presidents Clinton and Bush froze hundreds of pending regulations issued by their predecessor's administrations.

"There are good-government reasons to do what they are doing," said Sally Katzen, the top regulatory aide to President Clinton from 1993 to 1998, according to the Times. "But it has the added advantage of providing an excuse for not doing something they don't want attributed to them, and for speeding up the things they want to lock in before the next administration."

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