AFP sent a comment letter to the Internal Revenue Service in response to proposed changes to Section 385. AFP and many business groups believe the changes to Reg 385 “would significantly increase the cost of doing business for American companies, creating obstacles to much needed investment, job creation and economic growth,” the comment letter states.
AFP and its members believe the proposed changes to Reg 385 would adversely affect cash pooling—a common practice among treasury groups in multinational corporations. “[Due] to the volume of transactions entered into by the treasury centers and participants, these consequences have the potential to affect the entire system and all of its participants,” AFP writes.
“We understand that the U.S. Treasury Department is making a good-faith effort to combat corporate tax loopholes, but Reg 385 unintentionally goes too far and affects everyday treasury functions,” said Jim Kaitz, president and chief executive officer of AFP. “We hope Treasury will reconsider this facet of the proposal.”Read the letter here.