The Treasury Department and the IRS are set to publish a forthcoming notice of proposed rulemaking (NPRM) that removes basis shifting transactions of interest (TOI) regulations from income tax regulations, according to Notice 2025-23 released on April 17.

According to the notice, taxpayers and their material advisors have noted that the intended proposed regulations, if finalized, will be imposing "complex, burdensome and retroactive technical rules on many ordinary-course and tax-compliant business activities." This, according to them, will create costly compliance obligations and uncertainty for businesses.

On Feb. 19, President Donald Trump issued Executive Order 14219, "Ensuring Lawful Governance and Implementing the President’s 'Department of Government Efficiency' Deregulatory Initiative." This  executive order tells agencies to start a review process to identify and remove certain regulations contained in the order.

Under this review, the Treasury Department and the IRS have identified the basis shifting TOI regulations for removal and the basis shifting notice for withdrawal as described in the notice.  

Notice 2025-23 offers immediate relief from penalties under 6707A(a) to participants in transactions identified as TOI in the basis shifting TOI Regulations that are needed to file disclosure statements under 6011 and penalties under 6707(a).

They are also needed to file under 6708 for material advisors to transactions identified as TOIs in the regulations that are required to file disclosure statements under 6111 and maintain lists under 6112. 

The notice withdraws Notice 2024-54, 2024-28 I.R.B. 24 (Basis Shifting Notice), which characterizes certain proposed regulations that the Treasury Department and the IRS intended to issue to address a partnership, the notice said.