The below letter was sent to Treasury Secretary Jack Lew from nearly 50 Ohio-based employers expressing their concern with the Treasury Department’s proposed regulations under section 385 of the Internal Revenue Code.
September 27, 2016
The Honorable Jacob Lew
United States Treasury Secretary
U.S. Department of the Treasury
1500 Pennsylvania Avenue, N.W.
Washington, DC 20220
Dear Secretary Lew:
As employers with headquarters, significant investments or business interests in Ohio, we write to inform you that the Treasury Department’s proposed regulations under section 385 of the Internal Revenue Code are already having a negative impact on Ohio’s business community. We believe the regulations, as proposed, go far beyond Treasury’s stated intent to curtail abusive transactions. If the regulations were to become final in their current form, they would significantly impede the ability of our businesses to invest and create jobs in Ohio.
The proposed regulations will complicate, and in some cases eliminate, our companies’ ability to self-finance our job growth and could obstruct access to capital. The broad language of the regulations creates uncertainty resulting in serious hesitation to make long-term commitments in an already challenging business environment. The regulations would inflict significant costs on our businesses, with no direct or indirect benefit to consumers, by mandating new and extensive tracking, documentation and compliance requirements. Finally, the subjective nature of the regulations and the new bifurcation authority given to the IRS would all-but ensure compliance issues and increased controversy.
In its mission statement, Treasury sets forth to, “Maintain a strong economy and create economic and job opportunities by promoting the conditions that enable economic growth and stability at home and abroad, strengthen national security by combating threats and protecting the integrity of the financial system, and manage the U.S. Government’s finances and resources effectively.” The proposed regulations fall short of achieving these goals. They would inhibit economic growth and stability through the excessive burdens imposed on Ohio businesses. They would hurt the integrity of our financial system with new overly broad rules. They would not effectively manage resources by creating more controversy. Finally, they would reduce business growth and thus tax revenues.
In previous letters, formal comments, and other communications many of us individually shared our views on how Treasury should move forward. These include substantial modification of the current proposal to address the numerous issues identified in the public comment process, a re-proposal of the regulations in order to more carefully target abusive transactions, and complete withdrawal. Collectively, as members of the broader Ohio business community, we implore you to take into full consideration the unintended collateral consequences the regulations would have on local economies in Ohio and across the U.S. We urge you to proceed in a manner which gives Ohio businesses and their direct and indirect employees the best chance to prosper and compete.
Abercrombie & Fitch Co.
Aggregate Industries Management, Inc.
Akzo Nobel Coatings, Inc.
American Petroleum Institute-Ohio
ARC Abrasives, Inc.
Big Lots, Inc.
Cardinal Health, Inc.
ContiTech - a Continental company
Cooper Tire & Rubber Company
Forest City Realty Trust, Inc.
Hyster-Yale Materials Handling, Inc.
InterContinental Hotels Group PLC
L Brands, Inc.
Lafarge North America, Inc., Holcim (US), Inc.
Manufacturing Policy Alliance (OH)
Navistar International Corporation
Ohio Chamber of Commerce
Ohio Manufacturers' Association
Patheon Pharmaceuticals, Inc.
Philips North America
Phillips Edison & Company, Ltd.
Sheely’s Furniture & Appliance Co. Inc.
Tate & Lyle
The Kraft Heinz Company
The Procter & Gamble Company
The Timken Company
United Technologies Corporation