ICYMI: Section 385 Regulations to Have Significant Negative Impact on Manufacturers

NAM, Financial Executives Discuss Concerns with U.S. Treasury’s Proposed Regulations

Washington, D.C., July 7, 2016 – The U.S. Treasury alarmed the manufacturing sector a few months ago by issuing its proposed debt-equity regulations, commonly known as the Section 385 regulations. With the 90-day comment period expiring today, National Association of Manufacturers (NAM) Vice President of Tax and Domestic Economic Policy Dorothy Coleman joined Ecolab Inc. Vice President of Tax Judy McNamara and Brunswick Corporation Vice President of Tax Judith Zelisko on a press call this week to discuss manufacturers’ serious concerns with Section 385.

Below are some key excerpts from the call:

“It’s very clear to the NAM that the regulations are going to threaten economic growth, investment and jobs. The additional costs are going to take resources away from much-needed investment, and it’s also going to discourage companies from investing in the United States. And I think it’s also important to note that the proposal goes well beyond tax policy. Even though it came under the umbrella of anti-inversion guidance from Treasury…it’s obvious these [regulations] are very far reaching and really have a severe impact on a company’s finance and treasury functions, particularly their cash management.”

NAM Vice President of Tax and Domestic Economic Policy Dorothy Coleman
“These Section 385 regulations apply to companies like Ecolab—which is not inverted—and we’re being subjected to unreasonable regulations and burdens. It’s very likely that our tax costs will increase through double taxation and loss of foreign tax credits, making it even harder for us to compete on an already uneven playing field with our foreign competitors. Treasury needs time to fully analyze the issue, the retroactive date of April 4 needs to be removed, and something this significant needs to be the subject of legislation, perhaps in the context of tax reform discussions. I would say, in my view, the Treasury Department has burned down the entire house in its attempt to kill a rodent.”

Ecolab Inc. Vice President of Tax Judy McNamara
“These regulations…are having consequences on companies with global operations that are not inverted companies. And [these regulations] would impede our efficient and cost-effective operations….There would be increased costs to comply with these proposed 385 regulations, [which] will unnecessarily increase the cost of doing business....Therefore, we are asking Treasury to carefully analyze, review and understand how these broadly swept rules would impact a company like Brunswick.”

Brunswick Corporation Vice President of Tax Judith Zelisko


The National Association of Manufacturers (NAM) is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs more than 12 million men and women, contributes $2.17 trillion to the U.S. economy annually, has the largest economic impact of any major sector and accounts for more than three-quarters of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the Manufacturers or to follow us on Shopfloor, Twitter and Facebook, please visit www.nam.org.

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