A leading manufacturing trade group is ramping up lobbying efforts on regulations for one of the 2017 tax overhaul’s biggest revenue raisers.

The Internal Revenue Service’s proposed rules (REG-106089-18) for the tax law provision, which restricts deductions of debt interest payments, have prompted consternation among manufacturers and their tax planners for making their debt more expensive. The proposed rules also would cause the new limit on interest write-offs to hit many companies several years sooner than expected.

The National Association of Manufacturers requested that members of its “interest expense working group” send comments so it can write an official letter to the IRS laying out its requests for changes to the proposed rules, according to a Jan. 31 email sent to the members and obtained by Bloomberg Tax.

The industry behemoth, whose members include a couple dozen smaller trade groups and associations, spent nearly $9.5 million on lobbying last year, according to its lobbying disclosure forms.

“Examples of the impact of the proposed regulations would be particularly helpful,” said the email from NAM Senior Director for Tax Policy David Eiselsberg. The organization’s deadline for comments was set for Feb. 4, with a call on the proposed rules scheduled for Feb. 11, according to the email.

NAM declined to comment.

The Cap

The tax law capped companies’ debt interest write-offs at 30 percent of earnings before interest, taxes, depreciation and amortization out of the equation under amended tax code Section 163(j). Starting in 2022, companies can’t add back in their depreciation or amortization—accounting benefits used to recover the cost of, respectively, tangible and intangible assets through tax breaks over a number of years.

Effectively, the income amount shrinks, and so does the 30 percent cap on interest expense deductions. The revenue implications of the switch provide a glimpse of its ripple effects: For the four years before the change, the interest write-off cap is projected to raise $65.4 billion, according to the Joint Committee on Taxation. Over the four years following the switch from EBITDA to EBIT, as the income measures are commonly known, the JCT projects that the provision would raise $116.5 billion.

But the proposed rules don’t allow companies to add back into that first income calculation any costs incurred as depreciation but that are allocated to companies’ inventories and included in the cost of goods sold.

For manufacturers, almost everything they purchase fits the definition of inventory or cost of goods sold, so the change coming in 2022—which lobbyists had already been preparing to stop in its tracks—might as well have already happened for the sector. Oil refiners and, to a lesser extent, retailers are affected by this as well.

NAM’s Plans

NAM has discussed the issue with Treasury Department officials, with the goal of changing the income measure by the time the IRS finalizes regulations, according to a lobbyist involved in the effort. The group believes it has made progress with Treasury on the issue and wished to keep the matter quiet, as talks remained delicate, the lobbyist said.

In a Feb. 4 NAM meeting on tax issues, the lobbyist said, the group focused much of its attention on Section 163(j), a top tax priority, and expressed concerns that information about its lobbying activity had been leaked to the press.

A Treasury Department official told Bloomberg Tax in a Feb. 5 email that the department is studying the income measure issue and collecting feedback on the proposed rules. The official confirmed that Treasury discussed the issue on a phone call with NAM.