OIRA’s Expanded Review of Tax Regulations and Its Surprising Implications

Abstract

Executive Order 12866 describes U.S. policy on regulatory planning and review. It directs agencies to identify the nature and significance of the problem they are trying to solve with regulation, to identify alternative solutions, to assess the quantifiable and non-quantifiable costs and benefits of each alternative, and then to choose the option that maximizes net benefits to society, taking into account distributional effects and other considerations. That policy, which has governed U.S. regulation for several decades, is managed by the Office of Information and Regulatory Affairs (“OIRA”). It is also subject to several exemptions. In April 2018, the U.S. Department of Treasury and the Office of Management and Budget signed a historic memorandum of agreement narrowing one of those exemptions. The memorandum expands the number of Internal Revenue Service regulatory actions for which the Service must comply with Executive Order 12866. This action moved tax rules out of the “presidential tax-policy blind spot.” This article offers a close study of that memorandum of agreement and reveals six striking features that not only affect tax regulation, but also offer intriguing possibilities for (1) scholarly understanding of OIRA as an institution and (2) the future of regulatory review of independent regulatory agencies, which are currently exempt from OIRA review.

Keywords: OIRA, OMB, IRS, Treasury, tax, regulatory review, memoranda of agreement, MOA, economic analysis, EO 12866, independent agencies, independent regulatory agencies