Closing The Tax Man’s Loophole
As Tax Day approaches, Americans are scrambling to understand the new tax forms and file their returns. Most are well aware of the effect of the Tax Cuts and Jobs Act of 2017 on the tax code and reporting requirements. But something else has changed since last year that, while much less visible to the public, may contribute to better IRS policies in the long run.
One year ago, the Treasury Department signed an agreement with the Office of Management and Budget (OMB) in which it committed to subject IRS regulations to the same analytical and oversight procedures that other executive branch regulations have followed for almost four decades. For the first time this past year, the IRS has submitted its rules to OMB’s Office of Information and Regulatory Affairs (OIRA) for review and begun to conduct analysis of regulatory impacts. At a recent Society for Benefit-Cost Analysis conference, my colleague Jerry Ellig and I joined other panelists to discuss these changes and evaluate how well the new agreement is working.
Regulatory Oversight and the IRS
OIRA is an office of about 50—mostly career—professionals with expertise in policy analysis, economics, statistics, and law who provide what President Obama called “a dispassionate and analytical second opinion” on draft regulations. OIRA analysts coordinate interagency review across the government to ensure coherence among policies, and they review regulatory impact analyses to ensure agencies have weighed the likely benefits and costs of their proposed actions. Although staffed by career (i.e., not political) professionals, the office’s location in the Executive Office of the President also provides an important mechanism for ensuring policies are responsive to the elected president.