The U.S. Treasury Department exceeded its authority by proposingwide-ranging regulations intended to curb corporations' abilityto shift their American earnings overseas, tax lawyers told agencyofficials during a hearing last week.

Their complaints added to a growing corporate backlash againstthe so-called earnings-stripping regulations, which broadly aim tocurb loans from foreign companies to their U.S. subsidiaries. Suchloans, which allow for moving U.S. income overseas viatax-deductible interest payments, represent a key tax-cuttingstrategy for U.S.-based companies that have moved their taxaddresses offshore.

But the rules are written so broadly that they also hit dailyinternal financing operations in global companies that aren'tavoiding taxes, according to several letters sent to the Treasuryas public comments on the proposal.