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14 March 2017

Will President Trump’s “2-for-1” Knockout Policy Affect Your Taxes?

Will President Trump’s “2-for-1” Knockout Policy Affect Your Taxes?

One of the executive orders signed by President Trump in the first few days of his administration deals with federal regulations. Essentially, government agencies like the IRS must identify two regulations to repeal for every new regulation they wish to add.

The Presidential Executive Order reads as follows:

“Unless prohibited by law, whenever an executive department or agency (agency) publicly proposes for notice and comment or otherwise promulgates a new regulation, it shall identify at least two existing regulations to be repealed.”

The order goes on to explain that any new regulations must also “zero out” when it comes to the 2017 budget, stating that “any new incremental costs associated with new regulations shall, to the extent permitted by law, be offset by the elimination of existing costs associated with at least two prior regulations.”

Is this executive order expected to affect your taxes? Will it limit the IRS’s ability to issue rulings, as Bloomberg BNA’s Daily Tax Report points out?

It’s not likely.

The order addresses “significant regulatory actions” and, according to the Government Accountability Office, the IRS doesn’t usually propose significant actions. In fact, only one of more than 200 tax regulations issued by the IRS between 2013 and 2015 was determined to be significant. A previous order in place for decades already exempts regulations issued by IRS and two other bureaus from further analysis and review unless they were considered “legislative and major.”  

Instead, the order is expected to affect environmental protection, food and drug safety, and consumer finance to a larger extent. When signing the order, President Trump stated that it would benefit small businesses in particular.

“We want to make ... life easier for small businesses,” he said, adding, “Regulation has been horrible for big business, but it’s been worse for small business.”

Exactly how it will benefit small businesses is yet to be determined. In the meantime, don’t expect the IRS to turn a blind eye to issues that require regulatory rulings. For questions, contact us.  

Image Copyright: filmfoto / 123RF Stock Photo

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