IRS Regulation Blitz

As often happens before a transition in presidential administrations, the outgoing team at the U.S. Department of the Treasury and the IRS scramble to finish and publish guidance in the pipeline. The current transition is no exception. Between Jan. 2 and Jan. 10, Treasury and the IRS published six regulations in the Federal Register and filed 10 more regulations for publication in the Federal Register. Final regulations issued during this period cover the following:

• Clean energy production credit under Section 45Y and the clean energy investment credit under Section 45E
• Partnership basis-shifting transaction of interest
• Classification of digital content transactions and cloud transactions
• Tax on gifts and bequests from covered expatriates
• Rules regarding certain disregarded payments and dual consolidated losses
• Microcaptive listed transactions and transactions of interest
• Clean electricity low-income community bonus credit
• Credit for production of clean hydrogen and certain provisions of the Inflation Reduction Act energy credit
• Decentralized finance digital asset broker reporting

Proposed regulations issued during this period cover the following:

• Qualified commercial clean vehicle credit under Section 45W
• Automatic enrollment for certain retirement plans under Section 414A
• Source of income from cloud transactions
• Base erosion anti-abuse tax for qualified derivative payments on securities lending transactions
• Catch-up contributions to certain retirement plans
• Alternative fuel vehicle refueling property credit under Section 30C
• Excise tax on designated drugs

Crowe observation

In addition to regulations, the IRS has been issuing informal guidance in advance of the transition to the new administration, including Notice 2025-10 previewing regulations on the clean energy production credit and Notice 2025-11 regarding emissions rates.

Fate of Biden administration regulations and other guidance

It is common for a new administration to review regulations issued by the previous administration to determine whether to make changes. The first Trump administration took this approach, resulting in removal or modification of several regulations issued by the Obama administration. It is likely that the incoming Trump administration will take a similar approach, which could result in the removal or modification of regulations issued by the Biden administration, including regulations released in 2024 and early in 2025.

Removal or modification of a final regulation published in the Federal Register is governed by the Administrative Procedure Act and involves publication of new temporary or final regulations in the Federal Register. It could take the new administration a while to complete this process. Withdrawing a proposed regulation can be done more quickly than removing or withdrawing a final regulation. The process for removing or modifying informal guidance is even quicker than withdrawing a proposed regulation. An announcement by the new administration that it intends to remove, withdraw, or modify guidance can be used to give the public advance notice of the change.

Under the Congressional Review Act, Congress also can enact a joint resolution to disapprove a particular rule, effectively removing the rule, provided Congress acts within certain time frames.

Looking ahead

The Biden administration published a significant number of regulations and other guidance in the past few months and continues to release additional guidance. Many of these projects were high priorities for the administration, such as projects implementing the clean energy provisions of the Inflation Reduction Act or projects designed to increase enforcement efforts around large corporations, complex partnerships, international tax, and high-income individuals. Other guidance issued in the waning days of the Biden administration are projects that have taken significant time and effort to draft and are finally being brought to the finish line.

Whatever the reason behind the guidance or the timing of when it is being issued, all guidance issued by the Biden administration is sure to be scrutinized by the new administration. As of now, it is unclear which guidance will survive this scrutiny. Taxpayers should consult with their tax advisers to stay abreast of the latest developments.