BEAT Proposed Regulations
Summary
SIFMA submitted comments to the IRS on the proposed regulations under Section 59A of the Internal Revenue Code of 1986, as amended.
SIFMA recognizes and appreciates the efforts of Treasury to provide guidance on the implementation and application of Section 59A while avoiding undue interference with ordinary course financial markets transactions. However, SIFMA believes that several of the provisions in the Proposed Regulations are inconsistent with the relevant provisions of Section 59A.
Excerpt
Internal Revenue Service
CC:PA:LPD:PR (REG-104259-18)
Courier’s Desk
1111 Constitution Avenue, N.W.
Washington, DC 20224
Re: IRS REG-104259-18 (Proposed Regulations under Section 59A)
Ladies and Gentlemen:
The Securities Industry and Financial Markets Association (SIFMA)1 appreciates the opportunity to submit comments on the proposed regulations (the “Proposed Regulations”) under Section 59A of the Internal Revenue Code of 1986, as amended (the “Code”).2
I. INTRODUCTION
We recognize and appreciate the efforts of Treasury to provide guidance on the implementation and application of Section 59A while avoiding undue interference with ordinary course financial markets transactions. However, we believe that several of the provisions in the Proposed Regulations are inconsistent with the relevant provisions of Section 59A. Further, we believe that certain of the provisions in the Proposed Regulations, if adopted in their current form, will have uniquely detrimental effects on financial groups, their customers, and potentially the financial markets. Members of the financial industry serve as counterparties to a large portion of the derivatives entered into in the financial markets, including derivatives that hedge foreign currency risks. Additionally, the efficient functioning of the financial markets often requires the intermediated movement of cash and securities between jurisdictions, which financial institutions typically accomplish through sale-repurchase and securities lending transactions between affiliates. To the extent the Proposed Regulations effectively penalize or discourage either of these types of transactions, the ability of financial institutions to continue to enter into these transactions may be hampered, which could have negative implications for financial markets at large.