Expect Treasury regulators to try to regulate

Down in the meadow in a little bitty pool, swam three little fishies and a momma fishie too. ... Stop, cried the momma fish, or you’ll get lost, but the three little fishies didn’t want to be bossed.

Those are lyrics from a song, recorded by Kay Keyser and his band, which was the No. 1 song in the country in 1939.

I know it because my mother used to sing it to me. She was in high school in 1939 and knew the song well.

She left out the other verses. It turns out that the three little fishies didn’t listen to their mom, and ended up at sea, where they encountered a shark.

The Department is planning to issue several new tax regulations to address abusive uses of partnerships. One set is already out in proposed form. No one likes it.

The Supreme Court recently held that courts need not defer to regulatory interpretations of laws. That case dealt with people who caught fishies for a living.

Because of that case, many people are warning the Treasury to stay away from issuing new tax regulations, even where there are real abuses to address.

Congress, these people say, will need to deal with real or perceived abuses. Courts following the Supreme Court may not accept any other approach.

Back to the song, why did the little fishies ignore the mom’s warning? A simple explanation — fish gotta’ swim (just like birds gotta’ fly).

In 1976, Clint Eastwood starred in a film called “The Outlaw Josey Wales.” This was based on a real man, Bill Wilson, from the Ozark Mountains of Missouri.

In one scene, a man confronted Josey in a saloon and said, “You’re wanted Wales.” Josey countered, “You a bounty hunter?”

The fellow said, “A man’s got to do something for a living these (post-Civil war) days.” Wales said, “Dyin’ ain’t much of a living, boy.”

The man left. Shortly after, he returned and said, “I had to come back.” Wales said, “I know.”

The decision to return cost him his life. But, as he said, he had to come back. Fish gotta’ swim, birds gotta’ fly. Bounty hunters gotta' — well you know.

The Treasury Department has been warned not to issue new regulations interpreting ambiguous statutes. Let Congress do that work people say.

I fully expect the Treasury to move forward with the projects they have told us, before the Supreme Court’s slap down of regulatory guidance, they would issue.

Why would they do this? Wouldn’t it be more prudent, in the face of the Supreme Court’s decision, to allow Congress to step up?

Why did the fishies leave the dam for the open sea and its sharks? Why did that bounty hunter return to face the deadly Josey Wales?

I imagine the Treasury officials saying, “We had to issue these regulations.” Like Josey Wales, I would respond, “I know.”

There are some wicked smart people working for the Treasury on regulation projects. Most will eventually end up in the private sector helping businesses and individuals.

But for now, they work for the Treasury. And their job is to help the federal government address abusive tax planning ideas.

Regulators gotta’ regulate. Don’t criticize that. Fish gotta’ swim. Birds gotta’ fly. Bounty hunters gotta’ bounty hunt.

It’s the natural way of things. Following one’s purpose doesn’t always lead to success. Even Bill Wilson was murdered in McKinney, Texas, by two former comrades.

Treasury regulators know the Supreme Court, and lower courts also, will be gunning for them. But even after the recent decision, they still must be who they are.

That’s not to say that the Supreme Court’s decision will not change things. If you must face Josey Wales, you do your best to prepare.

Tax regulators may limit the scope of the rulemaking to better fit within the new standards for reviewing administrative rules.

Longer term, regulators may seek congressional directives for issuing their rules. But I don’t expect a freeze on rulemaking in the short term.

There seem to be many who want regulators to stay in bed wringing their hands with worry.

Whether you like rulemaking or not, the Treasury officials are professionals with significant skills. I suspect they have to come back.