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Treasury releases first guidance item on Trump tax law reviewed by OMB

Treasury releases first guidance item on Trump tax law reviewed by OMB
© Greg Nash

The Treasury Department and IRS on Wednesday released their first guidance item implementing President TrumpDonald John TrumpTrump to fundraise for 3 Republicans running for open seats: report Trump to nominate former Monsanto exec to top Interior position White House aides hadn’t heard of Trump's new tax cut: report MORE's tax-cut law that was reviewed by the Office of Management and Budget (OMB).

The proposed rule focuses on the new tax law's transition tax on corporations' untaxed foreign earnings.

“The Tax Cuts and Jobs Act creates a historic opportunity for American companies to bring capital back home from overseas to invest in our domestic economy and create jobs for hardworking Americans,” Treasury Secretary Steven MnuchinSteven Terner MnuchinCongress raises pressure on Saudi Arabia On The Money: Trump to seek new round of tax cuts after midterms | Mnuchin meets with Saudi crown prince | Trump threatens to cut foreign aid over caravan Trump admin to make Iran oil waivers harder to get MORE said. “Our administration’s policies are focused on creating a more competitive system for business, which has already led to greater economic and wage growth.”

Treasury and the OMB in April released a memo that increases OMB oversight of tax rules, which previously were generally exempt from review by OMB's Office of Information and Regulatory Affairs (OIRA). Under the memo, OMB can review tax rules that interfere with actions taken by other agencies, raise novel legal or policy issues or have an annual nonrevenue economic impact of at least $100 million.

The memo provides that rules implementing the new tax law can be designated to receive an expedited OMB review of 10 business days. The proposed regulation on the transition tax is the first guidance item to receive an expedited review by OMB, which the office completed last week. A Treasury Department spokesperson said that the review didn't result in any substantive changes to the proposed rules.

The proposed rules provide guidance on a provision of the new tax law that subjects companies' untaxed foreign earnings held in the form of cash or cash equivalents to a tax of 15.5 percent, and companies' untaxed foreign earning held in other forms to a tax of 8 percent. Taxpayers can pay the tax over a period of eight years.

The guidance document, which clocks in at 249 pages, provides information on how shareholders' amounts subject to the transition tax are calculated and reported, the IRS said.