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Lankford Wants Tax Regulations Subject to OIRA Review

WASHINGTON, DC – Senator James Lankford (R-OK) today introduced the IRS Accountability and Transparency Act to once again require a centralized review of tax regulations by the Office of Information and Regulatory Affairs (OIRA) after the Biden Administration revoked a memorandum of understanding (MOA) between the Department of Treasury and OIRA for OIRA to review tax-related regulations.

“Biden’s IRS has determined that they should not be subject to the same rules as other agencies or have any oversight from the Office of Information and Regulatory Affairs (OIRA),” said Lankford. “I completely disagree. Every agency should have oversight. No agency should have the ability to make up new rules or guidance without following the Administrative Procedure Act and the law.”

Background

Over the years, Treasury has held that its regulations simply apply the statute and are not an extension of the agency’s regulatory authority. Tax regulations fill in discretionary details that are not supplied by the statute. As such, these are not interpretive rules and should adhere to the Administrative Procedure Act. In a 2016 report, the Government Accountability Office (GAO) observed there have been numerous substantive changes in the nature of the tax code since the first MOA was signed:

Over the past three decades, the tax code has increasingly been used by policymakers as a tool for accomplishing social and economic objectives by creating special tax credits, deductions, and exemptions to achieve certain policy goals. These credits, deductions, and exemptions are known as “tax expenditures” because they represent revenue losses. In our body of work on tax expenditures, we have reported that they have major budgetary effects and deserve greater scrutiny. We have recommended that OMB periodically review how well specific tax expenditures work to achieve their goals and how their benefits and costs compare to those of other programs with similar goals. Since 1983, when OMB agreed to exempt some tax regulations from centralized review, the number of tax expenditures has increased substantially. Because Treasury and IRS are responsible for issuing regulations necessary to implement this growing number of tax expenditures, many tax regulations today are related to social and economic objectives rather than traditional tax collection or administration issues. However, tax regulations, including an increasing number implementing tax expenditures, are routinely exempt from E.O.

Lankford originally held a hearing on this subject in 2018 when he chaired the Regulatory Affairs and Federal Management Subcommittee of the Homeland Security Committee.

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