Dodd-Frank Mandated Changes Made to Regs.

Regulations

To comply with requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act, P.L. 111-203, the IRS has issued temporary and proposed regulations that remove all references to “credit ratings” from the Treasury regulations (T.D. 9533 and REG-118809-11). The regulations provide substitute standards of credit worthiness.

The Dodd-Frank Act requires all federal agencies to remove any reference to, or requirement of reliance on, credit ratings from their regulations and to substitute a standard of credit worthiness as the agency deems appropriate for such regulations.

The temporary regulations affect Secs. 150, 171, 197, 249, 475, 860G, 1001, and 4101. Most of the changes to the regulations involve simple deletions and/or substitutions where the words “credit ratings” or “credit agencies” appear. For example, in Regs. Sec. 1.170-1(f), “credit rating” is changed to “credit quality.” The regulation preamble states that where substitute language is provided, the IRS intends merely to conform to the requirements of the Dodd-Frank Act and that no substantive change is intended.

The temporary regulations were effective July 6.