IRS Extends Effective Date and Phase-in Period for Dividend Equivalent Rules

The Internal Revenue Service ("IRS") delayed implementing certain rules that are intended to prevent non-U.S. persons from using derivative instruments to avoid U.S. withholding tax on U.S. equities.

In Notice 2018-72, the IRS reported that the effective date for Section 871(m) and the phase-in period in Notice 2016-76 will be delayed. The IRS previously delayed the effectiveness of these rules by one year in 2017.

The anti-abuse rule will continue to apply during the phase-in years.