The proposed Section 385 debt/equity regulations are receiving considerable attention both within and outside the US government. Official letters from key associations have been addressed to Treasury Secretary Jacob Lew and the Chairmen and Ranking Members of the Congressional tax-writing committees outlining various concerns over the proposed regulations.

There are currently inconsistent statements circulating regarding whether Treasury and the IRS are considering delaying the proposed rules, with one recent report in the tax press indicating the Administration may delay finalization of the rules until year-end, but at least one other source indicating Treasury is still aiming to issue the final Section 385 regulations before Labor Day. Congressional Democrats and Republicans are also at odds on the issue of the proposed regulations, with Ways and Means Committee Chairman Kevin Brady (R-TX) quoted as saying the proposed regulations package should be delayed and Senate Democrats reportedly considering sending a letter to Treasury offering recommendations for changes.

The tax press is reporting that Treasury remains committed to the broad intent of the proposed Section 385 regulations, but is open to amending specific rules so long as such changes do not dampen curbs on earnings stripping. Treasury reportedly is open to considering changes related to cash pooling transactions, unintended consequences related to S corporation termination events, the bifurcation rule and the expanded group definition, among other possible amendments.

The tax press is also reporting that House Speaker Paul Ryan (R-WI) will release the long-awaited House tax reform blueprint on 24 June. The revenue-neutral proposal, which will outline the House Republican platform for future tax reform in time for the Republican National Convention in early July, may include a 20% corporate tax rate although discussions are ongoing. House Ways and Means Committee member Kenny Marchant (R-TX) confirmed the blueprint will be dynamically scored and based on a high US economic growth rate.

In OECD news, the OECD issued an announcement saying the OECD Council had approved amendments to the Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations on 23 May.

And, in the first of a series of webcasts this week, the OECD announced plans to release more discussion drafts on follow-up work related to BEPS. A discussion draft on interest related to banking and insurance under Action 4 is expected to be released on 18 July and another draft on branch mismatch arrangements under Action 2 reportedly will be issued during the week of 8 August. Further work is being undertaken related to profit attribution to permanent establishments (related to the work on Action 7 (preventing the artificial avoidance of permanent establishment)), and Actions 8-10 (transfer pricing), the profit-split method, and profit attribution, with discussion drafts to follow.

Pascal Saint-Amans, OECD Director of the Centre for Tax Policy and Administration, said 96 countries are now involved in discussions to develop the multilateral instrument under BEPS Action 15. He suggested the text of the multilateral instrument could be adopted before November 2016.