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GAO-17-212R 1 (2016-11-09)

handle is hein.gao/gaobadsua0001 and id is 1 raw text is: GAO U.S. GOVERNMENT ACCOUNTABILITY OFFICE 441 G St. N.W. Washington, DC 20548 B-328540 November 9, 2016 The Honorable Richard Shelby Chairman The Honorable Sherrod Brown Ranking Member Committee on Banking, Housing, and Urban Affairs United States Senate The Honorable Jeb Hensarling Chairman The Honorable Maxine Waters Ranking Member Committee on Financial Services House of Representatives Subject: Department of the Treasury, Internal Revenue Service: Treatment of Certain Interests in Corporations as Stock or Indebtedness Pursuant to section 801 (a)(2)(A) of title 5, United States Code, this is our report on a major rule promulgated by the Department of the Treasury, Internal Revenue Service (IRS) entitled Treatment of Certain Interests in Corporations as Stock or Indebtedness (RIN: 1545-BN40). We received the rule on October 26, 2016. It was published in the Federal Register as final regulations and temporary regulations on October 21, 2016, with an effective date of October 21, 2016. 81 Fed. Reg. 72,858. The final rule establishes threshold documentation requirements that must be satisfied in order for certain related-party interests in a corporation to be treated as indebtedness for federal tax purposes and treat as stock certain related-party interests that otherwise would be treated as indebtedness for federal tax purposes. IRS states that these requirements will affect corporations, including those that are partners of certain partnerships, when those corporations or partnerships issue purported indebtedness to related corporations or partnerships. The Congressional Review Act (CRA) requires a 60-day delay in the effective date of a major rule from the date of publication in the Federal Register or receipt of the rule by Congress, whichever is later. 5 U.S.C. § 801(a)(3)(A). This final rule was published in the Federal Register on October 21, 2016, and has a stated effective date of October 21, 2016. It was received on October 26, 2016. 81 Fed. Reg. 72, 858. Therefore, the final rule does not have the required 60-day delay in its effective date. However, IRS stated that the final rule will become applicable more than 60 days after publication. 81 Fed. Reg. 72,950. For example, section 1.385-3T is applicable to taxable years ending on or after January 19, 2017. 81 Fed. Reg. 72,979. GAO-17-212R

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