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ARTICLE · 27 MAY 2024

Section 871(m) And BEAT Qualified Derivative Payment Reporting Phase-Ins Extended Two More Years

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On May 22, 2024, the US Department of Treasury and the IRS issued two important notices—one delaying the full implementation of the withholding rules on dividend equivalent payments...

United StatesTax
Mark Leeds
Mark Leeds
Remmelt Reigersman
Remmelt Reigersman
Amit S. Neuman
Amit S. Neuman
Brennan W. Young
Brennan W. Young
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On May 22, 2024, the US Department of Treasury and the IRS issued two important notices—one delaying the full implementation of the withholding rules on dividend equivalent payments, and the other on derivative reporting for BEAT purposes. Notice 2024-44 (the "Notice") extends—until 2027—the phase-in of regulations under Section 871(m) of the Code (the "Regulations") and related provisions. As background, Section 871(m) and the Regulations treat "dividend equivalents," paid or deemed paid under certain contracts, as US source dividends that are subject to withholding tax if deemed paid to a non-US person.

However, the full scope and application of the Regulations have thus far been curtailed by several IRS notices that have provided transition rules, phase-in periods, and deferred effective dates. Taxpayers have—reasonably—come to rely on the softened version of the rules, which were set to expire at the end of this year. With the Notice, these rules have now been

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