“The Tax Cuts and Jobs Act leveled the playing field for American businesses and finally allowed the U.S. to shift from a worldwide to a territorial system of taxation,” said Mnuchin. “Because tax cuts made our business environment more competitive, we are now able to remove regulatory burdens that have been rendered obsolete, further reduce costs for job creators and hardworking Americans, and protect the U.S. tax base.”

The Treasury, in the new regulations, has withdrawn the documentation requirement, saying that it placed too much of a burden on taxpayers for little actual benefit. It has thereby removed the requirements set forth in those regulations on taxpayers with respect to certain transactions related to debt issuance. It noted that a comment letter expressed concern that the change would hamper the ability of the IRS to counter earnings stripping,and result in significant decreases in federal revenue. In addition, the commenter asserted that the removal likely would reduce the overall perceived legitimacy of the U.S. tax system, and consequently reduce voluntary compliance. In response to these concerns, the Treasury did leave open the possibility for a modified version of the requirements in the future, which it said would be "substantially" streamlined and simplified in order to minimize taxpayer burden. 

The Treasury Department has also published proposed regulations that would further strip down the 2016 anti-inversion rules by applying the rules only in the event the issuance of a debt instrument has a "sufficient factual connection to a distribution to a member of the taxpayer's expanded group or an economically similar transaction (for example, when the funding transaction and distribution or economically similar transaction are pursuant to an integrated plan)." Those debt instruments issued without such a connection would not be treated as stock. The Treasury Department believes this would be more streamlined and targeted while continuing to deter tax-motivated uneconomic activity.

Written or electronic comments on the proposed regulations must be received by Feb. 3, 2020.