The one-year postponement assists taxpayers that are developing compliance systems, amidst broader government review of the related-party debt regulations.

On July 28, 2017, the US Department of the Treasury (Treasury) and the Internal Revenue Service (the IRS) issued Notice 2017-36, delaying for one year the documentation requirements applicable to certain related-party debt instruments under regulations issued pursuant to Internal Revenue Code Section 385 (the Regulations). As reasons for the delay, Treasury and the IRS cited (1) continued taxpayer concern about the time needed to develop systems and processes to comply with the documentation requirements and (2) Treasury’s broader review of the Regulations under President Trump’s recent executive order instructing the Treasury Secretary to identify and reduce tax regulatory burdens. The announcement does not affect the Regulations’ per se equity rule, under which certain debt instruments will be treated as stock for tax purposes.