On January 24, the Internal Revenue Service (IRS) formally published in the Federal Register final regulations (discussed here) defining MLP qualifying income. The regulations were published despite a January 20 memorandum (available here) issued by the Trump Administration imposing a general freeze on, among other things, the publication of regulations in the Federal Register.
The freeze applies to executive departments and agencies, including the IRS. It is similar to freezes imposed by Presidents Reagan, Clinton, George W. Bush and Obama upon taking office.
The freeze generally applies to a pending regulation until an official designated by the Trump Administration has reviewed and approved the regulation. However, the freeze is subject to any exceptions allowed by the Office of Management and Budget (OMB) for “emergency situations or other urgent circumstances relating to health, safety, financial, or national security matters, or otherwise.”
At the time the freeze order was imposed, the text of three sets of tax regulations had been released to the public but not yet officially published in the Federal Register: the final MLP qualifying income regulations, final and temporary regulations regarding dividend-equivalent payments and proposed regulations regarding the new partnership audit rules.
The final MLP qualifying income regulations and the final and temporary dividend-equivalent payment regulations were published in the Federal Register on January 24. In response to a press inquiry, the IRS stated on January 24 that the publication of those regulations in the Federal Register had been approved by OMB. The IRS further noted that the January 19 effective date contained in those regulations predated the January 20 freeze memo.
The IRS also stated that, as required by the freeze, it would not publish the proposed regulations regarding the new partnership audit rules in the Federal Register.