Free-market groups: IRS rules shouldn't be exempt from White House review

Free-market groups: IRS rules shouldn't be exempt from White House review
© Greg Nash

A coalition of free-market groups is urging President TrumpDonald John TrumpTrump mocks wind power: 'When the wind doesn't blow, just turn off the television' Pentagon investigator probing whether acting chief boosted former employer Boeing Trump blasts McCain, bemoans not getting 'thank you' for funeral MORE and top administration officials to withdraw an agreement that allows IRS rules to avoid review from the Office of Management and Budget (OMB).

“The IRS must live by the same rules of administrative law and agency oversight as the rest of the executive branch,” the groups wrote in a letter Tuesday.

The letter was sent to Trump, Treasury Secretary Steven MnuchinSteven Terner MnuchinTrump: China tariffs will remain for 'substantial period of time' even with deal Pompeo presses for resolution to Gulf dispute On The Money: Trump issues first veto, warning of 'reckless' resolution | US hits Russia with new sanctions | Dems renew push for contractor back pay | Lawmakers seek probe into undocumented workers at Trump businesses MORE, OMB Director Mick MulvaneyJohn (Mick) Michael MulvaneyMulvaney poised to become permanent White House chief of staff: report Pentagon sends Congress list of projects that could lose funds to Trump's emergency declaration Trump: Media 'working overtime to blame me' for New Zealand attack MORE and Neomi Rao, administrator of OMB’s Office of Information and Regulatory Affairs.

For decades, the IRS and OMB have had an agreement that generally exempts tax rules from full OMB review. The IRS has argued that the economic effects of its actions come from the laws their rules interpret, rather than from the rules themselves, making OMB review unnecessary.

But the free-market groups said the IRS’s exemption prevents Congress from getting information about major rules that should be reported to the Government Accountability Office while curbing the White House’s ability to supervise the executive branch.

The groups also said the IRS's current practice “impacts the public’s right to learn about and comment on the economic impact of IRS rules that are subject to the Regulatory Flexibility Act.”

Groups that signed the letter include Americans for Prosperity, Americans for Tax Reform, Cause of Action Institute and Citizens Against Government Waste.

Trump signed an executive order last year that directed the Treasury Department and the OMB to review the exemption for tax rules from OMB review. Sens. Ron JohnsonRonald (Ron) Harold JohnsonScott Walker considering running for Wisconsin governor or Senate: report GOP moves to rein in president's emergency powers The Hill's 12:30 Report: O'Rourke jumps into 2020 fray MORE (R-Wis.) and James LankfordJames Paul LankfordSenate GOP poised to go 'nuclear' on Trump picks GOP senators eye 'nuclear' move to change rules on Trump nominees Senate GOP goes down to wire in showdown with Trump MORE (R-Okla.) have also urged the Treasury Department and the OMB to revisit its agreement on the exemption.

But some tax lawyers have expressed concerns that subjecting IRS rules to OMB review would slow down the process of issuing guidance needed to implement the new tax law.

When asked about the issue on Monday, House Ways and Means Committee Chairman Kevin BradyKevin Patrick BradySmaller tax refunds put GOP on defensive Key author of GOP tax law joins Ernst and Young Lawmakers beat lobbyists at charity hockey game MORE (R-Texas) said he encourages the OMB to “maintain their traditional role in rulemaking” but that when it comes to rules implementing the tax law, the bulk of the work will come from the Treasury Department.