IRS Notice Targets Repatriation of Offshore Earnings

The IRS and Treasury targeted cross-border triangular reorganizations and inbound nonrecognition transactions in Notice 2016-73, 2016-52 IRB 908. The Notice, issued on Dec 2, 2016, is the sixth set of rules that the government issued in the last decade regarding these transactions and the latest sal...

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Bibliographic Details
Published in:Journal of International Taxation 2017-02, Vol.28 (2), p.14
Main Authors: Anson, Tim, DiFronzo, Mike, Dubert, Carl, Hermann, Jared, McHoney, Douglas, Collins, Marty, Markham, Charles, Chen, Matt, Mullaney, Sean, Junge, Aaron, Boyer, Mark, Gartner, Gabe, Sewall, Arthur, Lohnes, Tim, Sobol, Horacio, Miyares, Henry, Sutton, Wade
Format: Article
Language:English
Subjects:
Controlled foreign corporations
Earnings
International taxation
Notices
Offshore
Repatriation
Stockholders
Tax reform
Tax regulations
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Summary:The IRS and Treasury targeted cross-border triangular reorganizations and inbound nonrecognition transactions in Notice 2016-73, 2016-52 IRB 908. The Notice, issued on Dec 2, 2016, is the sixth set of rules that the government issued in the last decade regarding these transactions and the latest salvo in its campaign against repatriation of offshore cash. The Notice describes future Regulations that would modify the rules regarding cross-border triangular reorganizations and certain inbound nonrecognition transactions. Taxpayers frequently use crossborder triangular reorganizations to integrate foreign target corporations with their existing foreign operations. The Notice says that Treasury and IRS intend to modify the application of the Section 367(a) and Section 367(b) priority rules to cross-border triangular reorganizations. With the potential looming for a deemed repatriation of foreign earnings and comprehensive tax reform, including a territorial tax system, Notice 2016-73 may represent the last shot in this decade-long campaign against repatriation. The phenomenon of trapped offshore cash may become a relic of the past within a year's time.
ISSN:1049-6378