Coalition of Franchisee Associations Supports Treasury Decision to Withdraw Proposed Section 2704 Regulation Changes

WASHINGTON, D.C. (Oct. 6, 2017) – The Coalition of Franchisee Associations (CFA) is proud to announce that an effort led by CFA Vice Chair Robert Branca, on behalf of the entire franchising industry, has led to the withdrawal by the Treasury Department and Internal Revenue Service (IRS) of proposed changes to Section 2704. These changes could have had a substantial impact on franchisees, as limitations in liquidating their franchise assets would have created an over valuation in gift reporting.

Mr. Branca initially commented on the proposed regulation in this letter, which was widely reported in the business, franchising and estate planning industries. In addition, Mr. Branca testified at the proposed rule change hearing on Dec. 1, 2016, and was joined by CFA Chair Keith Miller, who also testified. Both pointed out the many limitations, specific to franchising, that reduce the value upon sale or transfer; therefore, the current rule that allows for discounting on gift reporting is needed.

“This withdrawal reflects the reality that the IRS sought to ignore and will help countless small family businesses remain with family,” Mr. Branca said.