The US Department of the Treasury and Internal Revenue Service (IRS) issued Notice 2025-23 on 17 April 2025, announcing plans to propose removing the basis shifting transactions of interest regulations (T.D. 10028) originally issued on 14 January 2025 by the Biden administration.

The regulations have classified certain partnership related-party basis adjustment transactions and substantially similar transactions as transactions of interest, a type of reportable transaction. Material advisors and certain participants in these transactions are required to file disclosures with the IRS and are subject to penalties for failure to disclose. The final regulations affect participants in these transactions as well as material advisors.

The Notice withdraws Notice 2024-54, which outlined the proposed regulations from the Treasury and IRS on partnership related-party basis shifting transactions.

The Notice 2025-23 was issued under the February 2025 executive order from US President Donald Trump, directing agencies to review and remove regulations that undermine the national interest. It offers immediate relief from certain penalties.

It waives penalties under IRC section 6707A(a) for participants involved in identified basis-shifting transactions who are required to file disclosure statements under section 6011. It also provides relief from penalties under Sections 6707(a) and 6708 for material advisors to these transactions, who are required to file disclosure statements under Section 6111 and maintain the required lists under Section 6112.

Taxpayers and their material advisors may rely on the guidance outlined in Notice 2025-23, effective from 17 April 2025, until the proposed rulemaking process is finalised.