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Treasury Strategies update on IRS Rule 385 – the “final and temporary” rules

Treasury Strategies has been a high profile advocate on behalf of corporate and banking clients dealing with the regulatory fallout from the financial crisis.

On Rule 385, we argued strongly on behalf of our corporate clients that the proposed changes threaten to disrupt routine daily cash management practices of most medium-size and large corporations and the banks who serve them.

Last week, the Treasury Department release its final rules in a 518-page document that does grant substantial relief along the lines we suggested in our June 30 comment letter.

Nonetheless, we see a few deficiencies that may affect you:

  • First, although the ruling does attempt to define cash pooling, the definition of cash pooling lacks the level of precision we had hoped would create a very bright line of guidance.
  • Second, you must be aware that some of the rules affecting cash pooling are temporary and will expire in three years if not formally made permanent.

As the process continues, Treasury Strategies will continue our strong advocacy role.  We continue to appreciate your input.  Let us know if you’re attending the AFP Conference next week and perhaps we could meet.  Otherwise, please send us a note telling us how these or other rules are affecting your company.

Best regards,

Cathy Gregg, Managing Director                    Tony Carfang, Managing Director

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