Excerpt
May 21, 2025
U.S. Department of the Treasury
1500 Pennsylvania Ave NW
Washington, D.C. 20220
Re: Proposed Changes to Existing Regulations
Ladies and Gentlemen:
The Securities Industry and Financial Markets Association (SIFMA) submits these comments in response to Executive Order 14219, “Ensuring Lawful Governance and Implementing the President’s ‘Department of Government Efficiency’ Deregulatory Initiative,” (the “Executive Order”) and the related “Presidential Memorandum Directing the Repeal of Unlawful Regulations.” (the “Presidential Memorandum”).
SIFMA believes that the regulations discussed below impose significant costs upon private parties that are not outweighed by public benefits and, in certain instances, rely on legal and regulatory precedents which the Executive Order and the Presidential Memorandum expressly challenge. The following addresses final regulations as well as proposed regulations that SIFMA believes should be amended, withdrawn, or repealed based on the principles set out in the Executive Order and Presidential Memorandum and provides cites to submissions that SIFMA has previously made on these topics.
I. Executive Summary
SIFMA proposes that Treasury and the IRS repeal or amend the following regulations:
- Section 987 regulations. The 2023 Proposed Regulations and 2024 Finalized and Proposed Regulations continue to present significant ambiguities and compliance burdens for the financial services industry, which is uniquely impacted by these regulations due to the nature of our business operations. Until these issues are resolved, SIFMA would propose to bring back the former rules which allowed financial services entities to adopt any reasonable method of calculating their section 987 gain or loss. SIFMA also proposes retaining the Hedging Transaction Election.
- Portions of the section 871(m) regulations. While finalized in 2017, implementation of some portions of the regulations has been delayed until 2027, and SIFMA continues to have concerns about the compliance burden of delayed portions of the regulations relative to the benefits of the regulations. We believe the best approach is to maintain the rules as provided for by Notice 2024-44 and its predecessors and reexamine the section 871(m) regulations in light of the concerns that prompted the continued delay of the implementation date.
- Disregarded Payment Loss (“DPL”) regulations. SIFMA believes Treasury and the IRS lacked the requisite authority to enact these regulations. In addition, the complexity and administrative burden of complying with the DPL regulations outweighs their public benefit. SIFMA believes these regulations should be repealed.
- Foreign Tax Credit (“FTC”) Final regulations. The 2022 FTC regulations impose significant administrative and compliance burdens on taxpayers, which outweigh any benefit to the public. In addition, these regulations have already been suspended by Notice.
SIFMA believes Treasury and the IRS should rescind, amend, or otherwise modify the following proposed regulations:
- Corporate Alternative Minimum Tax (“CAMT”) regulations. The Treasury and IRS should issue a notice as soon as possible withdrawing and expressing the intention to repropose Prop. Treas. Reg. §1.56A-5, which provides adjustments to partners’ distributive share of partnership AFSI.
- Proposed regulations concerning the identification of basket contracts as listed transactions. We recommend the Treasury and IRS issue a notice as soon as possible withdrawing these proposed regulations.
- Stock Buyback Funding Rule. The Treasury and IRS relied on its authority under section 4501(d) in proposing this rule in a manner that is inconsistent with Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024). The Rule also deviates from the plain meaning of the statute and would be overly broad in its application. SIFMA believes this proposed regulation should be withdrawn.
- Proposed regulations concerning taxes on taxable distributions from donor advised funds under section 4966. We recommend the Treasury and IRS issue a notice as soon as possible withdrawing these proposed regulations.
- Reconsider Withholding and Information Reporting Regulations. SIFMA and its members have identified several regulations relating to withholding and information reporting that should be reexamined in light of the significant compliance and system costs they impose relative to the regulations’ public benefit. These include: Treas. Reg. § 1.1471-5(e)(4)(i)(B); the sourcing of payments to non-U.S. vendors under Treas. Reg. § 1.1441-3(d); redemption exchanges treated
as dividend distributions under sections 1441, 6045, and 302; additional relief in the digital asset regulations under section 6045; issue guidance confirming Forms W-9 can be electronically signed in the same manner as Forms W-8; provide for the indefinite validity of Forms W-8; and re-examine Treas. Reg. § 1.6049-5. SIFMA would welcome the opportunity to enter into a full dialogue with the Treasury and IRS regarding these regulations.