| Home > 1994 Unified Agenda > ua14no94 DEPARTMENT OF VETERANS AFFAIRS (VA)...
ua14no94 DEPARTMENT OF VETERANS AFFAIRS (VA)...
<DOC> DEPARTMENT OF THE TREASURY (TREAS) Regulatory Plan for Fiscal Year 1995 Background The Department of the Treasury is composed of, in addition to Departmental Offices, a number of offices and bureaus which have responsibility for a wide range of regulations. The primary missions of the Department include: <bullet> Protecting and collecting the revenue under the Internal Revenue Code and customs laws; <bullet> Supervising national banks and thrift institutions; <bullet> Managing the fiscal operations of the Federal Government; <bullet> Enforcing laws relating to counterfeiting, Federal Government securities, firearms and explosives, foreign commerce in goods and financial instruments, and smuggling and trafficking in contraband; <bullet> Protecting the President, Vice President, and certain foreign diplomatic personnel; <bullet> Training Federal, State, and local law enforcement officers; and <bullet> Producing coins and currency. While implementing its wide-ranging regulatory responsibilities, Treasury has aggressively pursued opportunities to reduce regulatory burdens, to reach out to the public for input when it promulgates regulations, and to provide clear, concise guidance for the many complicated statutes the Department administers. For example, shortly after the Administration took office, Treasury consulted with other banking regulators, the banking industry, the business community, and consumer groups to assemble a regulatory relief package to address the credit crunch. And the Department's efforts did not stop there: The Department's Office of the Comptroller of the Currency began a project to review, simplify, and reduce the number of regulations it administers regarding national banks. Themes and Priorities for Fiscal Year 1995 To fulfill the regulatory principles announced by the President in Executive Order (E.O.) 12866, the Treasury Department has the following themes and priorities for fiscal year 1995: <bullet> We will continue to improve the efficiency of collection operations under the tax code through additional automation of taxpayer filing, and we will seek to improve taxpayer compliance with complex tax statutes by providing additional guidance in a number of areas. <bullet> In banking and finance, we will continue to reduce the regulatory burden, where possible, by deleting regulatory requirements, and we will continue to coordinate with other banking regulators to ensure that we implement common statutory schemes through uniform regulatory requirements. <bullet> In the law enforcement arena, we will continue to reach out to law-abiding citizens to get their input when we use regulations to enforce statutory mandates so that law- enforcement compliance costs for businesses are kept to a minimum. <bullet> To improve the ability of U.S. companies and consumers to reap the benefits of expanding international trade, we will improve the efficiency of Customs operations, and finalize regulations implementing the North American Free Trade Agreement Implementation Act and its Customs modernization provisions. Consistent with these themes and priorities, and our statutory responsibilities to implement the laws as enacted by the Congress and signed by the President, we will continue to look for opportunities to delete unnecessary regulations, seek maximum public input in the promulgation of regulations, and improve our internal regulatory processes. A more detailed description of our regulatory priorities follows. Statement of Regulatory Priorities Departmental Offices Office of the Under Secretary for Enforcement Office of Financial Enforcement The Bank Secrecy Act (BSA) authorizes the Secretary of the Treasury to issue regulations requiring financial institutions to maintain records and file reports determined to have a high degree of usefulness in criminal, tax, or regulatory proceedings. These regulations, codified at 31 CFR part 103, are developed by the Office of Financial Enforcement (OFE) and issued by the Director of the Financial Crimes Enforcement Network (FinCEN) in the Office of the Under Secretary for Enforcement. The purpose of these regulations is to combat financial crime, particularly money laundering. OFE has sought to reduce the cost and burden of compliance with BSA regulations and to enhance the utility of those regulations to law enforcement. To this end, OFE is working to: <bullet> Simplify the Currency Transaction Report (CTR); <bullet> Streamline and simplify the BSA process for exempting certain accounts from BSA currency transaction reporting requirements; <bullet> Clarify existing regulations defining non-bank financial institutions that are subject to BSA regulations; <bullet> Develop regulations requiring, and improve existing mechanisms for, the reporting of suspicious transactions; <bullet> Develop regulations requiring financial institutions to implement ``Know Your Customer'' procedures; and <bullet> Reduce the substantial recordkeeping requirements applicable to the sale of money orders and other similar monetary instruments. To comply with the principles and philosophy of E.O. 12866, the Department has initiated extensive consultation with financial institutions and persons affected by BSA reporting and recordkeeping requirements to tailor regulations that impose the least amount of burden. In 1993, the Department convened an interagency Money Laundering Task Force staffed by experienced agents and regulators from Treasury bureaus with BSA compliance and money-laundering responsibilities. This Task Force undertook a comprehensive examination of Treasury's BSA regulatory programs, with a special focus on the manner in which Treasury exercises its BSA authority. The Task Force made recommendations to the Bank Secrecy Act Advisory Group (Advisory Group) established by the Department, which consists of representatives from financial institutions and trades and businesses affected by the requirements of the BSA and section 6050I of the Internal Revenue Code of 1986, plus staff from Treasury, the Department of Justice, and the White House Office of National Drug Control Policy. The Advisory Group is considering alternative regulatory approaches and formulating recommendations concerning the BSA to Treasury policy officials. During fiscal year 1995, OFE will accord priority to regulations concerning recordkeeping requirements for international and domestic funds transfers, requirements for the inclusion of certain information in funds transfer payment orders, and the implementation of new anti- money laundering procedures and programs. These regulatory projects are described below. In addition, OFE will determine whether to withdraw its proposed rules regarding the mandatory aggregation of currency transactions and filing of CTRs by magnetic media. Enhanced computer technology for the tracking and reporting of financial transactions may permit OFE to achieve the objectives of its proposed regulations through alternative means. These alternative methods may permit the design of rules that achieve the Department's regulatory objective in a more cost-effective manner, consistent with the principles of E.O. 12866. Internal Revenue Service The Internal Revenue Service (IRS) promulgates regulations that interpret and implement the Internal Revenue Code and related tax statutes. Consistent with E.O. 12866, the IRS adheres to the following principle in developing its regulations: To carry out the tax policy determined by Congress fairly, impartially, reasonably, and practically, taking into account rational tax policy, the intent of Congress, the realities of relevant transactions, the need for the Government to administer the rules and monitor compliance, and the overall integrity of the Federal tax system. The goal of the IRS is to make the regulations practical and user- friendly by providing guidance that is as clear and simple as possible. Most IRS regulations interpret tax statutes to resolve ambiguities or fill gaps in the tax statutes. During fiscal year 1995, the IRS' priorities will include the following regulations interpreting and implementing tax provisions contained in the Omnibus Budget Reconciliation Act of 1993 (OBRA 1993) and the North American Free Trade Agreement (NAFTA) Implementation Act: <bullet>Electronic Funds Transfer for Tax Deposits. Currently, certain taxpayers are required to deposit taxes with an authorized government depository (generally, a commercial bank or savings institution or a Federal Reserve bank) by various dates specified in regulations. Each deposit must be accompanied by a form (Form 8109, Federal Tax Deposit Coupon) which contains tax and taxpayer information. The government depository processes the form and forwards it to the appropriate IRS Service Center. NAFTA amended the Internal Revenue Code to authorize the issuance of regulations that are necessary for the development and implementation of an electronic funds transfer system to replace the current form-based system for the collection of depository taxes. The new system will be phased in over a period of several years, beginning with fiscal year 1994. (Note: A related regulation to be issued by the Financial Management Service is described below.) <bullet>Substantiation of Certain Charitable Contributions. OBRA 1993 amended the Internal Revenue Code by not allowing a deduction for a charitable contribution of $250 or more unless the donor obtains contemporaneous written acknowledgment of the contribution from the charitable donee. This new substantiation requirement is effective for contributions made after December 31, 1993. The regulations implementing this section also will provide special substantiation rules for contributions made by payroll deduction. <bullet>Spousal Travel and Club Dues. OBRA 1993 limited the deductibility of club dues, spousal travel expenses, and business meals. However, this statutory change did not answer the question of whether by denying the deduction to the employer, the employee is required to recognize income. The regulation will address this and other fringe benefit questions. <bullet>Lobbying; Influencing Legislation. OBRA 1993 amended the Internal Revenue Code to deny a deduction for amounts paid or incurred in connection with influencing legislation (other than local legislation) by communicating with members or employees of the legislative and executive branches who may participate in the formulation of legislation. Proposed regulations defining the term ``lobbying'' were issued in May 1994. Final regulations will provide guidance to business taxpayers and certain exempt organizations also subject to these rules by defining activities of which the costs are not deductible. <bullet>Earnings Invested in Excess Passive Assets. This regulation will implement a change in the Internal Revenue Code (section 956A) added by OBRA 1993 which provides rules to determine, with respect to the U.S. shareholder of a controlled foreign corporation (CFC), the amount of earnings of the CFC invested in excess passive assets. The regulation also will provide guidance to taxpayers on the meaning and scope of certain terms in the statute, such as ``applicable earnings'' and ``passive assets,'' on the application of section 956A with respect to groups of CFCs, and on the computation of the section 956A amount. <bullet>Diesel Fuel Excise Tax. OBRA 1993 amended the Internal Revenue Code (section 4081) by imposing an excise tax on diesel fuel. OBRA 1993 provided an exemption from the excise tax for certain diesel fuel; that fuel is dyed to aid compliance in accordance with regulations issued under the Internal Revenue Code. The regulation will provide guidance on issues relating to the imposition of, and liability for, the tax; the exemption for dyed diesel fuel; the back-up tax on dyed diesel fuel used for a taxable purpose; and credits and payments relating to taxed diesel fuel used for a nontaxable purpose. <bullet>Mark-to-Market Accounting for Dealers in Securities. OBRA 1993 amended the Internal Revenue Code to require dealers in securities to account for their securities by marking them to market. The statutory definitions of the terms ``security'' and ``dealer in securities'' are extremely broad. Preliminary guidance in the form of temporary regulations was provided in 1993. A regulation providing additional guidance will be published in fiscal year 1995. <bullet>Conduit Financing Arrangements. This regulation will implement section 7701(l) of the Internal Revenue Code, added by OBRA 1993. This new section provides that the Secretary of the Treasury may issue regulations recharacterizing any multiple-party financing transaction as a transaction directly among any two or more of the parties where the Secretary determines that a recharacterization is appropriate to prevent avoidance of any tax imposed by the Internal Revenue Code. <bullet>Special Passive Activity Loss (PAL) Rules. Section 469 of the Internal Revenue Code disallows losses from passive activities to the extent they exceed income from passive activities. Traditionally, passive activities have included (1) trade or business activities in which the taxpayer does not materially participate and (2) rental activities regardless of the level of the taxpayer's participation. OBRA 1993 added section 469(c)(7) to the Internal Revenue Code to modify the PAL rules relating to certain real estate. This regulation will provide taxpayers with guidance concerning the application of the new section. The IRS also will accord priority during fiscal year 1995 to the following regulations: <bullet>Research or Experimental Expenditures. The Revenue Reconciliation Act of 1989 amended section 174 of the Internal Revenue Code with respect to research and experimental expenditures. These regulations will be revised to provide additional guidance to taxpayers and IRS personnel regarding the term ``research and experimental expenditures'' under section 174. <bullet>Triangular Corporate Reorganizations. Between 1954 and 1971, in order to increase flexibility in structuring transactions, Congress enacted laws allowing an acquiring corporation to acquire the stock or assets of, or to merge into, a target corporation in exchange for stock of the acquiring company's parent corporation in a tax-free ``triangular'' reorganization. The enabling legislation did not provide guidance, however, as to the effect of the acquisition on the parent corporation's basis in the stock of its acquiring subsidiary. Proposed regulations were issued in 1981 setting forth the IRS position on the basis issue. In a number of transactions since the enabling legislation, and in some cases since the proposed regulations were issued, taxpayers have taken positions that have inappropriately enhanced the parent's basis in the stock of the acquiring subsidiary following triangular reorganizations. These regulations will provide guidance regarding the acquiring parent's basis in the stock of the acquiring subsidiary following a triangular reorganization. <bullet>Allocation of Interest Expense to U.S. Trade or Business of a Foreign Corporation. Section 882(a) of the Internal Revenue Code imposes a tax on the income of a foreign corporation that is effectively connected with the conduct of a trade or business within the United States (ECI). Section 882(c) allows deductions and credits only to the extent that they are connected with ECI, and further provides that the proper allocation and apportionment of deductions shall be determined as provided in regulations. Current regulations prescribe rules for allocating interest expense, using an approach that combines concepts of fungibility of funding and tracing of interest expense. Proposed regulations published in 1992 to replace existing rules better reflect the current economic environment and changes in the law since the original regulations were promulgated. The proposed regulations, among other things, impose a 96 percent cap on a bank's actual debt-to-assets ratio; reduce the elective fixed ratio to 93 percent; and eliminate the separate currency pool method of determining the appropriate interest rate for U.S. liabilities. <bullet>Modification of Debt Instruments. Under section 1001 of the Internal Revenue Code and current regulations, gain or loss is realized on an exchange of properties that differ materially either in kind or extent. Under longstanding
Other Popular 1994 Unified Agenda Documents:
|GovRecords.org presents information on various agencies of the United States Government. Even though all information is believed to be credible and accurate, no guarantees are made on the complete accuracy of our government records archive. Care should be taken to verify the information presented by responsible parties. Please see our reference page for congressional, presidential, and judicial branch contact information. GovRecords.org values visitor privacy. Please see the privacy page for more information.|
Supreme Court Decisions
104th Congressional Documents
105th Congressional Documents
106th Congressional Documents
107th Congressional Documents
108th Congressional Documents
1994 Presidential Documents