Republican members of the Senate Finance Committee, Senators Dean Heller (R-NV), Mike Crapo (R-ID), John Cornyn (R-TX), Johnny Isakson (R-GA), Pat Roberts (R-KS), John Thune (R-SD), and Tim Scott (R-SC) sent a letter to Secretary of Treasury Jacob Lew expressing concern over Treasury and the IRS’s proposed debt-equity regulations under section 385. The letter requests that Treasury extend the July 7 comment period deadline to at least October 5 and change the effective date for the rules so that they would apply to debt instruments issued, or deemed issued, no sooner than 90 days after the date the regulations are issued in final form.
The letter also requests that the proposed rules be substantially modified so that “ordinary business transactions unrelated to tax avoidance are not adversely affected” and lists several other concerns that the Senators have heard from stakeholders, including concerns related to the application of the proposed rules to S corporations, cash pooling, revolving credit agreements, foreign-to-foreign transactions, and small businesses. Some of the concerns and requests echo those contained in an earlier letter concerning the proposed regulations sent by Republicans on the House Ways and Means Committee. For prior coverage, click here.