On September 1, 2017, TEI submitted further comments to the Internal Revenue Service on the final debt documentation requirements in Treas. Reg. § 1.385-2 (T.D. 9790, 81 Fed. Reg. 72,858). Our comments were made in response to Notice 2017-36, One-Year Delay in the Application of § 1.385-2, in which the Treasury Department and the IRS announced their intention to amend the documentation regulations to apply only to interests issued or deemed issued on or after January 1, 2019—a 12-month delay. The notice requested comments on whether the proposed amendment and delay would afford adequate time for taxpayers to develop the necessary systems and processes to comply with the regulations. We responded in the negative, reemphasizing the immense financial and administrative burdens imposed on taxpayers by the documentation requirements, and recommended several remedial modifications for Treasury and the IRS to adopt. We also renewed our request for the indefinite suspension of Treas. Reg. § 1.385-2 pending the promulgation of more administrable rules.
TEI’s comments were prepared under the aegis of the Institute’s Federal Tax Committee. Watson M. McLeish, Tax Counsel for the Institute, coordinated the preparation of TEI’s comments.