Commenting on Regulations

0 Flares 0 Flares ×

A recent paper shines a light on the fascinating process of commenting on regulations. This year Tax Notes recognized the regulation writers at the IRS Office of Chief Counsel and the Treasury Department as the most significant tax players. Because of the 2017 legislation and the downsizing of Chief Counsel’s office due to the budget reductions over the past eight year, the attorneys there did a tremendous job under very difficult circumstances. They are very deserving of the recognition given by Tax Notes.

The recent paper, entitled “Beyond Notice-and-Comment: The Making of the § 199A Regulations” was written by Shu-Yi Oei of Boston College Law School and Leigh Osofsky of the University of North Carolina at Chapel Hill. The authors focus on the comments made to Treasury and the IRS regarding just one provision of the 2017 legislation. This provision resulted in a high volume of comments because of its nature. The paper not only looks at the volume and the substance of the comments but takes a hard look at the timing and how the timing of comments plays into the final product.


Although I have limited experience in writing regulations and in commenting on regulations, the article was eye opening in its detail of the process of submissions. In addition to formal submission, the article also comments on the informal ways that parties can influence regulations through the scholarly and popular press, including blogs.

The authors spent a fair segment of the article chronicling the comments on section 199A made prior to the call for formal comments. They detail their effort to find the early comments. These comments do not have the same type of recordkeeping that attaches to formal comments made during the notice and comment period. Their efforts to find these comments is interesting in itself. Also interesting is the impact the early comments had on the proposed regulation. The authors note the number of times the proposed regulations refer to the comments receiving during the period prior to the call for notice and comments. This section had the greatest impact on me because it told me that players with early access have influence at the most critical time. Certainly, parties making comments on the proposed regulation have an influence but having an influence in the formation of the regulation seems even more meaningful.

Because low income taxpayers have no ability to hire lobbyists or attorneys to make their case during the process of creation of a regulation, the Pro Bono and Tax Clinic Committee of the ABA Tax Section tries to comment on legislation and other notices when the IRS puts out a call for comments. At some low income taxpayer clinics around the country, there is also an effort to comment. The article makes me wonder if we are missing an opportunity to more proactively provide our voice on the formation of rules because we generally wait for the IRS to make a request.

If you have ever participated in making comments or wondered about the process, this article will open your eyes. Thanks to the authors for great work.


  1. Franke C Paulett, EA says

    Sec. 199A-3(b)(1)(iv) of the final regulations provides that QBI must be reduced by 50% of the SE tax, the SEHI deduction, and the deduction for contributions to a self-employed retirement plan, whereas the proposed regulations which we are supposed to be able to rely upon, contained no hint of the above provisions.

    Pursuant to IRC sec. 199A(c)(3)(A)(i) deductions allowed in computing QBI must be “effectively connected with the conduct of a trade or business within the US. It appears to me that the Treasury has exceeded its authority in requiring the three deductions cited above to be subtracted from QBI. Does anyone else believe that the final regulations cited above are contrary to Congressional intent and Treasury has exceeded its authority? If not, why aren’t such deductions allowed on Schedule C and reduce self- employment income and taxes?

  2. Norman Diamond says

    ‘Pursuant to IRC sec. 199A(c)(3)(A)(i) deductions allowed in computing QBI must be “effectively connected with the conduct of a trade or business within the US.’

    Another nail in the coffin of Cook v. Tait?

  3. Kenneth H. Ryesky says

    The Paper confirms what I have long suspected regarding the opaque aspectss of the process.

    I myself have had occasion to submit comments in various IRS rulemaking proceedings (and on a few occasions actually gave live testimony at the hearings); the impacts of some of my comments are discernible from comparing the Proposed Regs to the Final Regs.

    Also note that it is not unusual for the IRS to contemporaneously issue verbatim Proposed Regs and Temporary Regs, thereby evading the maxim that Proposed Regulations do not have the force of law, while Temporary Regulations do.

    As for the Tax Analysts organization, it is safe to say that no other organization has done more to level the playing field between IRS and tax practitioner; accordingly, it does not trouble me that they obviously have a sweetheart deal with the IRS. For the 23 April 2013 Hearing on the ObamaCare Employers Mandate regs, Tax Analysts had the recording concession. Prior to publishing the Unofficial Transcript of the Hearing [2013 TNT 80-16] I was given the opportunity to make corrections to the initial transcript of my oral testimony; other Hearing witnesses informed me that they were extended similar courtesies by Tax Analysts.

    Many commentators, myself included, send copies of our written comments to Tax Analysts (and, for that matter, to other tax-oriented publications, including but not limited to CCH).

Comment Policy: While we all have years of experience as practitioners and attorneys, and while Keith and Les have taught for many years, we think our work is better when we generate input from others. That is one of the reasons we solicit guest posts (and also because of the time it takes to write what we think are high quality posts). Involvement from others makes our site better. That is why we have kept our site open to comments.

If you want to make a public comment, you must identify yourself (using your first and last name) and register by including your email. If you do not, we will remove your comment. In a comment, if you disagree with or intend to criticize someone (such as the poster, another commenter, a party or counsel in a case), you must do so in a respectful manner. We reserve the right to delete comments. If your comment is obnoxious, mean-spirited or violates our sense of decency we will remove the comment. While you have the right to say what you want, you do not have the right to say what you want on our blog.

Speak Your Mind