Bradley Partner Bruce Ely Quoted in Bloomberg BNA About Regulation Repeals Related to Alabama’s Red Tape Reduction Act

Bradley partner Bruce Ely was quoted in Bloomberg BNA about regulation repeals based on Alabama’s Red Tape Reduction Act. Under the act, within five years of July 1, 2013, each state agency is required to determine whether each rule that existed on that date should be continued as is, amended or repealed. The Department of Revenue has recently withdrawn numerous longstanding regulations that it determined were superfluous to existing statutes, as well as amendments.

For example, the rule about a target corporation’s recognition of gain, taxability on distribution, and gain or loss on property in complete liquidation is nearly verbatim to Ala. Code § 40-18-8. The rule governing additional deductions allowed for corporations is duplicative of Ala. Code § 40-18-38, which was repealed on Dec. 31, 2000.

“[The] code section was repealed as deadwood as part of the comprehensive legislation that essentially piggybacked the Alabama corporate income tax onto federal taxable income as the starting point,” Ely said.

However, Ely explained that other repealed rules are not quite as repetitive and unnecessary as the Department deemed. He noted that several of the repealed rules “may leave gaps in guidance for corporate taxpayers.” For example, most provisions in the rule governing consolidated return filing mechanics (Ala. Admin. Code r. 810-3-39-.06) can also be found in Ala. Code § 40-18-39, but the rule has specific guidance on how the throwback rule applies to Alabama affiliated groups. No such guidance exists in Ala. Code § 40-18-39.

Such gaps may leave taxpayers with less guidance than the rules previously provided. Ely told Bloomberg BNA he is hopeful the Department will soon issue new regulatory guidance to fill in these gaps.

The complete article, “Corporate Close-Up: Who Are You Calling Superfluous? Alabama’s Red Tape Reduction Act Rule Repeals Leave Practitioners Asking Questions,” appeared in Bloomberg BNA on December 25, 2017.