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IRS Corporate-Debt Rules Exceed Authority, Tax Lawyers Say

Rules are so broad that they hit companies' daily internal financing operations.

By Lynnley Browning and Saleha Mohsin, Bloomberg | Updated on July 19, 2016

The U.S. Treasury Department exceeded its authority by proposing wide-ranging regulations intended to curb corporations’ ability to shift their American earnings overseas, tax lawyers told agency officials during a hearing last week.

Their complaints added to a growing corporate backlash against the so-called earnings-stripping regulations, which broadly aim to curb loans from foreign companies to their U.S. subsidiaries. Such loans, which allow for moving U.S. income overseas via tax-deductible interest payments, represent a key tax-cutting strategy for U.S.-based companies that have moved their tax addresses offshore.

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