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Most IRS Regulations Exempt from President’s “2-for-1” Executive Order

President Trump recently signed an Executive Order (EO) aimed at reducing regulation. One of the main provisions of this EO requires two existing regulations be cut in exchange for every new regulation introduced.

Interim guidance on implementing this “2-for-1” rule appears to limit its power to “significant” regulatory actions, a category not inclusive of most IRS regulations.

The determining factor for whether a regulatory action qualifies as significant depends on EO 12866, signed by President Clinton. It defines a “significant regulatory action” as “any regulatory action that is likely to result in a rule that may:

  • Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities;
  • Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency;
  • Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or
  • Raise novel legal or policy issues arising out of legal mandates, the President’s priorities, or the principles set forth in this Executive order.”

Per the Government Accountability Office, tax regulations seldom prove “significant” by the Office of Information and Regulatory Affairs, thus only few become subject to additional review and analysis under EO 12866.

IRS and Treasury officials rarely designate tax regulations as economically significant since any financial impact generally stems from the underlying statute, not the regulation.

In fact, between 2013 and 2015, only one of more than 200 tax regulations issued fell under the category of significant.

By limiting the EO to “significant” regulatory actions, most IRS regulations remain excluded from its requirements, including the 2-for-1 rule.

For help in tax planning, or business and personal income tax returns, the experienced accounting team at Patrick & Robinson CPAs is always here for you.  Contact us at Office@CPAsite.co, or 904-396-5400.

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