Retroactive Status of Temporary Regs Is Unclear

Kandyce Korotky is quoted in Tax Notes regarding the retroactive status of temporary regulations under the Tax Cuts and Jobs Act.

Ms. Korotky says, “There’s kind of an open question about whether retroactivity and temporary regulations can go hand in hand.”

She notes that under section 7805(b)(2), the IRS can enact retroactive regulations that take effect when a new law is passed if the regulations are “filed or issued” within 18 months of the enactment of the statute. “The statute doesn’t clarify whether the rule applies to temporary regulations or final regulations, it just simply says regulations,” she said during a webinar hosted by the American Bar Association Section of Taxation.

When discussing the subregulatory challenges, Ms. Korotky says, “When important advice that taxpayers are relying on is coming out in FAQs or in other informal guidance, I think it puts a lot of pressure on the question of what can you rely on and is it valid.”