Legislation and Comment: The Making of the § 199A Regulations

62 Pages Posted: 9 Nov 2018 Last revised: 27 Mar 2019

See all articles by Shu-Yi Oei

Shu-Yi Oei

Duke University School of Law

Leigh Osofsky

University of North Carolina (UNC) at Chapel Hill

Date Written: November 2, 2018


In 2017, Congress passed major tax legislation at warp speed. After enactment, it fell to the Treasury Department to write regulations clarifying and implementing the new law. To assure democratic legitimacy in making regulations, administrative law provides that an agency must issue a notice of proposed rulemaking, followed by an opportunity for the public to comment (so called “notice and comment”). But, after the 2017 tax overhaul, many sophisticated actors did not wait until the issuance of a notice of proposed rulemaking to comment, instead going to Treasury immediately with comments designed to influence the regulations.

In this Article, we examine empirically this phenomenon of post-enactment commenting by studying the making of the Code Section 199A regulations—some of the most important regulations implementing the 2017 tax reform. We examined the inputs into the regulatory process from legislative enactment through the regulations’ finalization. We find extensive engagement by sophisticated parties and industry groups prior to the official notice-and-comment period, which helped shape and anchor rulemaking outcomes. Subsequent comments submitted in the official notice-and-comment period led to technical and other discrete changes, but did not fundamentally change the initial rulemaking approach. Throughout the rulemaking process, there was little direct, public-interested engagement.

Our study underscores how unorthodoxies in the legislative process bleed into the rulemaking process. Hasty legislation puts pressure on administrative law notice-and-comment procedures, exacerbating problems of unequal access and transparency already endemic to rulemaking, and potentially compromising democratic legitimacy. We propose solutions that may help ameliorate these problems and improve governance.

Keywords: 199A, tax policy, taxation, legislation, regulations, administrative law, notice-and-comment, partnership taxation, agencies, tax reform

JEL Classification: K23, K34, H20, H25, H26

Suggested Citation

Oei, Shu-Yi and Osofsky, Leigh, Legislation and Comment: The Making of the § 199A Regulations (November 2, 2018). Emory Law Journal, Forthcoming, Boston College Law School Legal Studies Research Paper No. 493, Available at SSRN: https://ssrn.com/abstract=3277672 or http://dx.doi.org/10.2139/ssrn.3277672

Shu-Yi Oei (Contact Author)

Duke University School of Law ( email )

Box 90360
Durham, NC 27708-0360
United States

Leigh Osofsky

University of North Carolina (UNC) at Chapel Hill ( email )

102 Ridge Road
Chapel Hill, NC NC 27514
United States

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