How Accounting Giants Craft Favorable Tax Rules From Inside Government

That year, Mr. Harter returned to PwC.

“I fully complied with the Treasury Department’s conflict rules by not meeting with PwC officials” during a two-year “cool down” that prevents government officials from meeting with their former employers, Harter said. Although he was involved in building the offshore tax break and meeting with corporate lobbyists, Mr. Harter did not recall meeting with Ms. Olson or other PwC officials on the matter.

Ms. Olson referred questions to PwC.

An insider track

The 2017 tax reform included a provision that allowed some individuals to deduct 20 percent tax on certain types of corporate income. But the law – known as Section 199A – largely excluded an undefined category of “intermediary services”. In 2018, lobbyists from various industries, including real estate and insurance, visited the Treasury Department to convince officials that the brokerage ban should not apply to them.

On August 1, according to records, Ms. Ellis met with her former PwC colleague, Mr. Feuerstein, and three other lobbyists for his client, the National Association of Realtors. They wanted real estate agents to qualify for the 20 percent deduction.

The meeting took place before the first draft of the proposed rules was even released, which meant Ms. Ellis’ former PwC colleague and client had an inside track straight away.

When the Treasury Department released its first version of the proposed rules a week later, real estate agents were eligible. The National Association of Realtors recognized the victory on their website. (The final rules only applied to brokers in stocks and other securities.)

Ms. Ellis’s meeting with Mr. Feuerstein appeared to violate a federal ethics rule that prohibits government officials from seeing their former private sector counterparts, said Don Fox, the acting director of the Office of Government Ethics during the Obama administration and before that, attorney in Republican and Democratic governments.

Mr Fox described the meeting as inappropriate. “It will certainly question how this regulation was drafted,” he said. “There is no way to undo the flaw that is now associated with it.”