On January 20th after President Trump was inaugurated he signed Executive Order Number One, which directs federal agencies to start moving to shut down the Affordable Care Act (ACA).
“It is the policy of my Administration to seek the prompt repeal of the Patient Protection and Affordable Care Act,” the Order reads. Several sections follow that order federal agencies to take actions to “…minimize the unwarranted economic and regulatory burdens of the Act, and prepare to afford the States more flexibility and control to create a more free and open healthcare market.” The Secretary of Health and Human Services and all other executive branch agencies are to:
• Waive, defer, grant exemptions from or delay the implementation of any ACA provision that imposes a fiscal burden on States or imposes fees on individuals, healthcare providers, health insurers, or makers of medical devices, products, or medications;
• Give greater flexibility to States and cooperate with them in implementing healthcare programs; and
• Encourage the development of interstate sales of health insurance.
It is important to understand the effect of this Order; It is not a repeal of the law and is largely symbolic. It is a statement by the Trump Administration that emphasizes the fact that repeal of the ACA is a top priority of the new administration. Although the ACA was the subject of the first executive order, repeal of the Act will not be the first action of the new Administration and Congress. House Speaker Paul Ryan (R-Wisc.) has given three different timelines for repeal while the House GOP Freedom Caucus has called for immediate action with no replacement. Democrats in Congress have vowed to fight any repeal effort. In short, there is no consensus at this time on Capitol Hill on how to proceed, so the fate of the ACA is uncertain for the near future.
Regulatory Freeze Kills Partnership Audit Regs
Ten days after the inauguration, President Trump issued another executive order entitled, “Reducing Regulation and Controlling Regulatory Costs.” The order directs federal agencies to eliminate two regulations for each new regulation that is released, through September 20, 2017. Also, any costs associated with new regulations must be offset by eliminating costs of existing regulations. How the agencies are to implement this order is explained by the Office of Management and Budget (OMB) in Q&As. The OMB states that the order applies only to “significant regulatory actions.” The definition of a significant action is complicated, so it remains to be seen what effect this order will have on the IRS. So far, the IRS has released two regulations, but has withdrawn its major initiative to create a centralized partnership audit regime to replace the burdensome TEFRA audit process. The withdrawn rules would have shifted assessment and collection of tax in an audit to the partnership level.
There are two regulations that have been published by the IRS:
Dividend equivalents: Final, temporary, and proposed regulations that revise the definition of dividend equivalents for purposes of withholding on U.S. source payments made to foreign persons.
Publicly traded partnerships: Final regulations clarify when mining income and income from other natural resources is qualified passive income under the publicly traded partnership rules.
Lucia Nasuti Smeal is a guest blogger on tax topics for Frazier & Deeter. Smeal is an attorney, a tax Professor with Georgia State University’s J. Mack Robinson College of Business, and former editor of Tax Notes Today, published by Tax Analysts. Smeal also worked as a legislative analyst for the Congressional Research Service and is a former member of the U.S. House Periodical Press Corps. She is a frequent speaker on current tax developments.