President Donald J. Trump has instructed federal government agencies not to send new regulations to the Office of the Federal Register for publication until they have been approved by a person designated by the president, with certain exceptions for emergency situations. In addition, regulations that have been submitted to the Office of the Federal Register but not yet published have been withdrawn pending further review. Regulations that have been published but have not yet taken effect have been delayed 60 days from Jan. 20 to allow for further review.
This freeze on new regulations applies to all types of regulations – including tax regulations – issued by the federal agencies. Pending tax regulations affected by the freeze include proposed regulations issued under Internal Revenue Code Section 2704 seeking to limit valuation discounts for interests in family-controlled entities and recently proposed regulations regarding the new partnership tax audit rules scheduled to become effective next year.
Tax regulations are also subject to Executive Order 13771, which requires federal agencies to repeal two regulations for each new regulation enacted. This order does exempt regulations that are directed to be issued by a specific statute.
A number of important tax areas are in need of regulations to provide guidance for taxpayers and their advisors. It is not yet known when the normal regulatory flow will be resumed.