Among other things, President Trump used his first week in office to issue a pair of orders that will stem the flow of tax regulations and could lead to changes in health-care-related tax guidance.
In his first major policy move as president, he issued an executive order directing agencies to use available authority and discretion to “waive, defer, grant exceptions from, or delay implementation of” provisions of the Affordable Care Act (ACA) that impose burdens such as taxes or penalties on providers, insurers, individuals, device makers, products and medications.
The directive itself does not change any of the ACA coverage or tax requirements. The Treasury Department would still need to actually issue guidance to change any of the tax rules. Such changes may require a full notice and comment period, and Treasury still may have limited ability to make any changes contrary to the statute.
Congressional Republicans are still discussing a path forward for potential legislative repeal and replacement of all or parts of the ACA. Four Republican senators last week released a draft replacement bill that would give states the option of continuing with the exchanges (and their associated tax provisions), or setting up a new system relying heavily on health savings accounts, or creating their own system. The bill would not repeal many ACA taxes (such as the medical device excise tax and the Section 1411 3.8% tax on net investment income), and has not caught on yet with conservative Republicans.
Trump’s chief of staff, Reince Priebus, issued a memorandum instructing agencies not to issue any further regulations until a newly appointed agency head has reviewed and approved them. Such a regulatory halt is not uncommon at the beginning of a new administration, and Priebus’ letter closely mirrors one sent by then-White House Chief of Staff Rahm Emanuel in 2009. Priebus instructed agencies to pull all regulations from the Office of the Federal Register if not yet published. Despite the order, the Office of the Federal Register published two tax regulations on Jan. 24 (T.D. 9815 on divided equivalents under Section 871(m), and T.D. 9815 on qualifying activities of publicly traded partnerships under Section 7704).
Still, the order could put a damper on tax regulations for some time. Treasury and the IRS released proposed regulations last week on the new centralized partnership audit rules under the Bipartisan Budget Act of 2015, but they now appear to be in limbo. They have not been published in the Federal Register, and so have not officially been proposed. It will be up to the new Trump Treasury Department to decide when and whether to propose them in their current form or with changes.
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