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 TrumpRussia's election interference is a problem for the GOP Pence to pitch trade deal during trip to Michigan: report Iran oil minister: US made 'bad mistake' in ending sanctions waivers 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 MnuchinDems plot next move in Trump tax-return battle On The Money: House Dem says marijuana banking bill will get vote in spring | Buttigieg joins striking Stop & Shop workers | US home construction slips in March | Uber gets B investment for self-driving cars Former Sears holding company sues ex-CEO, Mnuchin and others over 'asset stripping' MORE, OMB Director Mick MulvaneyJohn (Mick) Michael MulvaneyTrump frustrated with aides who talked to Mueller The Hill's Morning Report — Mueller aftermath: What will House Dems do now? The Hill's Morning Report - Waiting on Mueller: Answers come on Thursday 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 JohnsonGOP senator: 'No problem' with Mueller testifying The Hill's Morning Report — Category 5 Mueller storm to hit today GOP senators double down on demand for Clinton email probe documents MORE (R-Wis.) and James LankfordJames Paul LankfordHow Republicans are battling judicial obstructionism today GOP gets used to saying 'no' to Trump GOP to go 'nuclear' with rules change for Trump nominations 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 BradySocial Security won't be able to fund full payouts by 2035 Treasury to miss Dem deadline for Trump tax returns Treasury expected to miss Dem deadline on Trump tax returns 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.