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Tax Alert: Annual Shareholder Reporting of PFIC Ownership Deferred Through 2012 Tax Year Pending Release of Final Regulations


Synopsis:
The IRS issued revised Form 8621, Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund, and accompanying instructions on January 30, 2013. The revised form includes a new Part I for annual information reporting by shareholders of passive foreign investment companies (PFICs) and qualified electing funds (QEFs) as required by new IRC Section 1298(f). The instructions, however, indicate that Part I is reserved for future use. Shareholders who would not otherwise be required to file IRS Form 8621 for tax year 2012 will not be required to file in order to report the information requested in new Part I until final regulations are published.

Suggested Action:
Please contact your CohnReznick client service professional for additional information. Individuals who are currently required to file IRS Form 8621, such as shareholders who have sold stock in a PFIC or received an excess distribution, or who are making an election, should continue to file IRS Form 8621.

Background:
IRC Section 1298(f) was enacted in 2010 as part of the HIRE Act. IRC Section 1298(f) requires all direct and indirect U.S. shareholders of PFICs to file an annual informational report. IRS Notice 2011-55 suspended this reporting requirement pending the release of amended IRS Form 8621 and final regulations under IRC Section 1298(f).

On January 30, 2013, the IRS released revised IRS Form 8621 and instructions, including a new Part I for reporting information as required by IRC Section 1298(f). The accompanying instructions state that Part I is reserved for future use. Taxpayers who are not otherwise required to file IRS Form 8621 are not required to file for 2012 until final regulations are released. Once final regulations are released, taxpayers will likely be required to report for tax years during which the filing requirement was suspended. If final regulations are issued and effective beginning in tax year 2013, then taxpayers would likely need to file form 8621 for every PFIC in which they directly or indirectly held stock during 2011, 2012, and 2013. 

Contact:
For more information, please visit the CohnReznick International Tax webpage and contact James Wall, Principal, International Tax Practice, at 646-607-2935, or Christopher White, CPA, Partner, International Tax Practice, at 818-297-2512.


 


Circular 230 Notice: In compliance with U.S. Treasury Regulations, the information included herein (or in any attachment) is not intended or written to be used, and it cannot be used, by any taxpayer for the purpose of i) avoiding penalties the IRS and others may impose on the taxpayer or ii) promoting, marketing, or recommending to another party any tax related matters.

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