The Internal Revenue Service ("IRS") and the U.S. Treasury Department ("Treasury") submitted final and temporary regulations regarding Section 871(m) requirements related to equity-linked instruments to the Office of the Federal Register on January 19, 2017. (See Cadwalader Memorandum in which attorneys discuss the phase-in of rules concerning withholding on dividend equivalent payments under IRS section 871(m).)
Note: A January 20, 2017 memorandum issued by White House Chief of Staff Reince Priebus requested that agencies under the purview of the executive branch freeze any pending regulatory actions "in order to ensure that the President's appointees or designees have the opportunity to review any new or pending regulation." The final and temporary regulations were published in the Federal Register on January 24, 2017 (four days after the Chief of Staff request), with an effective date of January 19, 2017.
In addition, the IRS and Treasury requested comments on proposed regulations relating to certain financial products providing for payments that are contingent on or determined by reference to U.S. source dividend payments. Comments on the proposed regulations must be submitted by April 24, 2017.
Commentary
This timeline forces issuers to make decisions regarding the status and effect of these regulations in disclosures for structured notes and other equity-linked derivatives.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
