With another new year nearly upon us, we call attention to
regulatory changes to the Stock Buyback Excise Tax that will be
proposed to take effect on January 1 and the implications on more
non-U.S. corporations. Specifically, we address exceptions for (i)
a broad new per se funding rule and (ii)
exceptions for dividends and reorganizations.
IRS Guidance to Stock Buyback Excise Tax to Impact More U.S.
Corporations
The Inflation Reduction Act of 2022 (Act),
enacted on August 16, 2022, introduced a 1% excise tax on stock
buybacks by public corporations (Excise Tax). Then on December 27,
2022, the U.S. Treasury and Internal Revenue Service released a
notice (Notice) describing certain rules intended to be included in
future proposed regulations on the Excise Tax. This bulletin
provides an overview of some of the Notice's more surprising
rules that could result in the Excise Tax being applied to public
non-U.S. corporations starting in 2023.
