On Wednesday, the Treasury Department formally withdrew the proposed regulations under Section 2704 of the Internal Revenue Code, which would have limited family-owned businesses’ use of minority discounts for the estate tax. AGC was actively involved in pushing for the regulations’ withdrawal. In October 2016, 730 family-owned AGC member companies sent a letter to then Secretary Lew calling for the regulations to be withdrawn. AGC also submitted comments during the rulemaking process in opposition to the proposed regulations, and co-signed comments in opposition from the Family Business Estate Tax Coalition.
This is a significant victory for family-owned construction firms and a reminder that even if legislation stalls in Congress, there are still opportunities for regulatory victories under the Trump Administration.
The withdrawal of these proposed regulations comes following an Executive Order President Trump signed earlier this year directing the Secretary of the Treasury to identify significant tax regulations issued on or after Jan. 1, 2016 that 1) impose an undue financial burden on U.S. taxpayers, 2) add undue complexity to the federal tax laws, or 3) exceed the statutory authority of the Internal Revenue Service (IRS). An obvious candidate for review under the Executive Order were the proposed regulations under Section 2704. The regulations as proposed could have raised family business’s estate taxes by an estimated 30 to 50 percent, were needlessly complicated, unnecessarily singled out family-owned businesses, exceeded the scope of IRS’s authority, and would have caused tremendous upheaval for succession planning.
For more information, contact Matthew Turkstra at email@example.com or (202) 547-4733.