This was a significant week for the National Association of Manufacturers’ (NAM) efforts to push back against the Treasury’s bombshell proposed regulations on Section 385, which would give the IRS broad latitude to recast intercompany debt as equity.
First, on Tuesday, the NAM held a corporate tax and treasury executives “fly-in,” which brought more than two dozen executives from NAM member companies for a series of meetings with the Treasury Department, the White House Council of Economic Advisers and key staffers to the House Ways and Means and Senate Finance Committee chairs and ranking members. Throughout the daylong event, executives discussed their deep concern about these extremely broad regulations. They made clear that despite what may be said by proponents of these proposed regulations, the fact is that the regulations go well beyond the stated purpose of addressing “inversions” or “earnings stripping” and will have a significant, negative impact on regular business operations, acquisitions, reorganizations and corporate financing to name a few. Indeed, some of the negative impacts aren’t far off in the future but rather are already occurring. With an April 4 effective date proposed in the regulations, companies are already freezing activities, including the repatriation of foreign earnings to be sure that these transactions aren’t going to be recast under these rules.
Throughout the day, these manufacturing executives explained how their corporate finance operations work and the broad impact of these regulations. In addition, they asked members of Congress to weigh in with Treasury to ensure that they heed manufacturers’ concerns and take the time to make significant changes to these regulations. During administration meetings, they shared real-life examples, burdens, costs and harm to competitiveness due to these proposed changes and urged them to make significant alterations in recognition of the overreach.
This event was followed by a June 22 letter from the majority of the House Ways and Means Democrats pointing out that there may be a number of circumstances “in which the regulations could adversely affect ordinary course of business transactions between related parties in the absence of tax avoidance motives.” That’s exactly what the NAM has been saying in more than three dozen meetings with both sides of the aisle in the House and Senate. While we don’t agree with the letter in its entirety, we appreciate that these members are reaffirming the impacts on internal cash management and calling for Treasury to note these concerns and consider the changes necessary to mitigate them.
The NAM will continue to advocate and educate on Capitol Hill on these regulations and share information and examples of how, as written, these will harm U.S. investment. We urge all members of the committees of jurisdiction to discuss the business community’s concerns with Treasury and ensure that due diligence is given to business community comments and that they don’t rush to finalize rules that will harm both U.S. competitiveness and investment.
In her role, Carolyn leads the Institute’s workforce efforts to close the skills gap and inspire all Americans to enter the U.S. manufacturing workforce, focusing on women, youth, and veterans. Carolyn steers the Institute’s initiatives and programs to educate the public on manufacturing careers, improve the quality of manufacturing education, engage, develop and retain key members of the workforce, and identify and document best practices. In addition, Carolyn drives the agenda for the Center for Manufacturing Research, which partners with leading consulting firms in the country. The Institute studies the critical issues facing manufacturing and then applies that research to develop and identify solutions that are implemented by companies, schools, governments, and organizations across the country.
Prior to joining the Institute, Carolyn was Senior Director of Tax Policy at the NAM beginning in 2011, where she was responsible for key portions of the NAM’s tax portfolio representing the manufacturing community on Capitol Hill and in the business community and working closely with the NAM membership. She served as the Director of Legislative and Government Affairs at the Telecommunications Industry Association, Manager of State and Federal Government Affairs for 3M Company, and in various positions on Capitol Hill including as Legislative Director for former U.S. Senator Olympia Snowe (R-ME), and as a senior legislative staff member for former U.S. Rep. Sue Kelly (R-NY).
Carolyn is a graduate of Gettysburg College in Gettysburg, Pennsylvania graduating with a B.A. in Political Science. She resides in Northern Virginia with her husband and three children.