Apparently I was wrong. It would appear that changes to the tax code are written by the Executive Branch,
Obama Administration Issues New Rules to Combat Tax Inversions
Actions Intended to Make Inversions Harder to Accomplish, Less Profitable
By John D. McKinnon And Damian Paletta
Wall Street Journal
Updated Sept. 22, 2014 6:19 p.m. ET
The Obama administration went on a regulatory offensive against U.S. companies that move to lower-tax countries, issuing new rules that take away major benefits of the deals.
In a multipronged attack, the administration took action under five separate sections of the tax code to make so-called inversions harder to accomplish and less profitable.
Three of the moves are aimed at blocking inverted companies from using techniques—sometimes known as "hopscotching"—to get access to their offshore cash without paying U.S. tax on it. Those would apply to deals closed on or after Sept. 22.
Another move makes it more difficult for U.S. firms to skirt current ownership standards in inverting. Still another move would make it harder for U.S. firms to spin off subsidiaries overseas.
Taken together, the administration's moves are likely to remove at least some of the economic appeal of inversions, which have become more common in recent years, particularly in the pharmaceutical industry. Noticeably absent, however, was a much-discussed idea to limit inverted companies' ability to ship U.S. profits overseas tax free.
Some experts have questioned how much authority the Treasury Department actually has in the area, and legal challenges to Monday's actions remain a possibility. The moves also seem unlikely to end inversions altogether, as even Treasury Secretary Jacob Lew has recently conceded, in part because the administration has little legal ability to block the most common type of inversion.
Still, Monday's announcement was likely to chill many deals, at least for now. The Treasury Department also promised to continue looking for other regulatory steps to discourage inversions, and to review tax treaties.
In an inversion, a U.S. company reincorporates for tax purposes in a tax-friendlier country such as the U.K. or Ireland, typically while maintaining its real headquarters in the U.S. Most recent inversions have come in mergers between a U.S. firm and a smaller foreign firm, after a series of regulatory steps during President Barack Obama's first term curbed other types of inversions.
Write to John D. McKinnon at john.mckinnon@wsj.com and Damian Paletta at damian.paletta@wsj.com
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