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How accounting giants craft favorable tax rules inside government

This year, Mr. Harter returned to PwC.

“I have fully complied with the Treasury Department’s conflict rules by not meeting with PwC officials” during a two-year “cooling off” period that prevents government officials from meeting with their former employers, said Mr. Harter. Although he participated in the construction of the offshore tax relief and met with corporate lobbyists, Mr Harter said he did not recall meeting Ms Olson or other PwC officials on the matter.

Ms Olson referred the questions to PwC.

The 2017 tax overhaul included a provision allowing certain people to benefit from a 20% tax deduction on certain types of business income. But the law … known as section 199A – largely excluded an undefined category of “brokerage services”. In 2018, lobbyists from several industries, including real estate and insurance, went to the Treasury to try to persuade officials that the broker ban should not apply to them.

On August 1, records show Ms Ellis met with her former PwC colleague, Mr Feuerstein, and three other lobbyists for her client, the National Association of Realtors. They wanted real estate brokers to be entitled to the 20% deduction.

The meeting took place even before the first draft of the proposed rules were made public, which meant that from the start Ms Ellis’ former PwC colleague and her client had a privileged lead.

When the Treasury released its first version of the rules proposed a week later, real estate brokers were eligible. The national association of real estate agents took the credit for the victory on its website. (The final rules only applied to brokers in stocks and other securities.)

Ms Ellis’ meeting with Mr Feuerstein appeared to violate a federal ethical rule that prevents government officials from meeting with their former colleagues in the private sector, said Don Fox, acting director of the Office of Government Ethics under the Obama administration and, prior to that, a lawyer in the Republican and Democratic administrations.

Mr. Fox called the meeting improper. “It will definitely call into question the way this regulation was drafted,” he said. “There’s no way to undo the taint that’s going to be attached to it now.”

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