U.S. tax authorities issue guidance on foreign account tax compliance

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1 U.S. tax authorities issue guidance on foreign account tax compliance The U.S. Treasury Department and the Internal Revenue Service (IRS) on 27 August 2010 issued initial and lengthy guidance under new chapter 4 of the Internal Revenue Code (sections ). Enacted in March 2010 as part of the Hiring Incentives to Restore Employment Act (HIRE Act), the so-called FATCA rules of chapter 4 are designed to prevent U.S. persons from evading U.S. tax by holding income-producing assets through accounts at foreign financial institutions (FFIs) or through other foreign entities (nonfinancial foreign entities, or NFFEs). The law does so by imposing tough new withholding tax requirements under IRC sections 1471(a) and 1472(a) on withholdable payments after 2012 to foreign entities, subject to exceptions for payments to FFIs that enter into agreements with the IRS to identify and report on their U.S. accounts, for payments to NFFEs that provide information about their substantial U.S. owners, and in certain other cases. Where an exception does not apply, the withholding tax rate on a withholdable payment will be 30%. The August 2010 guidance is contained in Notice , which explains in detail the terms that will be imposed by FFI agreements and the types of foreign entities that can receive payments without chapter 4 withholding. The notice also says that Treasury and the IRS intend to publish a draft FFI agreement and draft information reporting and certification forms. In addition to guiding foreign entities through the process of deciding whether they must enter FFI agreements to avoid chapter 4 withholding and helping them understand what the agreement entails, the notice provides guidance for U.S. financial institutions (USFIs) to determine whether they can refrain from withholding on withholdable payments. A withholdable payment generally encompasses any U.S.-source payment of interest (including any original issue discount), dividends, rent, salaries, wages, premiums, annuities, compensation, remuneration, or periodical gains, profits, and income and any gross proceeds from the sale or other disposition of any property of a type that can produce interest or dividends from sources within the U.S. This article summarizes highlights of Notice and offers some observations. Overview Notice deals with limited aspects of chapter 4 generally, how a withholding agent will know whether a withholdable payment that it makes is eligible for the transition rule that applies to some payments on obligations outstanding on 18 March 2012, and if not, whether a payment to an FFI is or can be exempt from withholding under section 1471(a) (and in some cases, whether payments are exempt from section 1472(a)). In particular, the notice deals extensively with the way in which an FFI will meet the requirements of section 1471(b) via an FFI agreement, thereby becoming a participating FFI eligible for an exemption from section 1471(a) withholding. It also addresses whether an FFI, even if not a participating FFI, is still eligible to be excluded from the class of recipients subject to withholding under section 1471(a). It deals with that in the context of holding companies; some group internal financial services companies; start-ups; companies liquidating or reorganizing; insurance companies; retirement plans; controlled foreign corporations (CFCs); entities with identified owners; FFIs with U.S. branches; and financial institutions organized in a U.S. territory. The diagram below provides a broad overview of the issues applicable to FFIs that are addressed by the notice: World Tax Advisor 1 of 10 Copyright 2010, Deloitte Global Services Limited.

2 FFIs and NFFEs Withholdable payments to FFIs are subject to section 1471(a) withholding, unless the FFI is: A participating FFI (one that has entered into an FFI agreement described in the notice and thus is eligible to receive payments free from withholding); A deemed-compliant FFI (one that is referred to in section 1471(b)(2), making it eligible, even without entering into an FFI agreement, for exemption from withholding); or Described in section 1471(f) (and thus exempt from withholding), which describes governmental and international organizations and foreign central banks of issue. Treasury may also identify other classes of persons posing a low risk of tax evasion, making them eligible to be treated as described in section 1471(f). FI definition in general Section 1471(d)(5) defines a financial institution (FI) by reference to three alternative activities: 1. Taking deposits in a banking or similar business; 2. Holding financial assets for the account of others; and 3. Engaging primarily in the business of investing, reinvesting or trading in financial assets, including securities, partnership interests and commodities, and the derivative interests therein. World Tax Advisor 2 of 10 Copyright 2010, Deloitte Global Services Limited.

3 The notice says the first category includes savings banks, commercial banks, savings and loans, thrifts, credit unions, building societies and other cooperative institutions. The second category includes broker-dealers, clearing organizations, trust companies, custodial banks and entities acting as custodians over the assets of employee benefit plans. Regarding the first and second categories, the notice says the fact that an entity is subject to the banking and credit laws or broker-dealer regulations of any country or political subdivision is relevant to, but not necessarily determinative of, whether the entity fits in the category. The third category includes mutual funds (or their foreign equivalent), funds of funds (and other similar investments), exchange-traded funds, hedge funds, private equity and venture capital funds, other managed funds, commodity pools and other investment vehicles. Of particular interest is a statement in the notice that future guidance is expected to provide guidelines for determining what types of activities constitute investing, reinvesting or trading, and when an entity is primarily engaged in those activities. Observation: The notice makes clear that the section 1471(d)(5)(C) concepts of business on the one hand, and of trade or business (as used in other sections of the IRC) on the other, are different in scope and concept. Thus, future guidance on what constitutes the business of investing, reinvesting or trading, and on when an entity is primarily engaged in those activities, may shed little or no light on whether a foreign person is engaged in a trade or business within the U.S. (as that term is used in sections 864(b) and (c), 871(b) and 882) or is instead engaged in an investing or proprietary trading activity that is not a U.S. trade or business (e.g. section 864(b)(2)). However, we expect that the criteria adopted to classify an activity as the business of investing or trading will be scrutinized by taxpayers for any similarity to the criteria that apply for purposes of non-chapter 4 trade or business determinations, including those under section 864(b) and section 162, and for determining whether an activity constitutes the conduct of a financial or insurance business under section 7704(d)(2)(A). Excluded financial institutions The notice says that Treasury and the IRS intend to issue regulations providing that a foreign entity that otherwise satisfies the definition of an FI solely because it is primarily engaged in investing, reinvesting or trading in securities will not be treated as an FI if it falls within one of four classes, and that payments beneficially owned by that entity will be exempt from withholding under section 1472(a). The four categories are: Some holding companies Specifically, holding companies for subsidiaries primarily engaged in a trade or business other than an FI business. The FI exception will not apply to an entity acting as an investment fund, such as a private equity, venture capital or leveraged buyout fund, or a vehicle intended to acquire or fund the start-up of companies and then hold those companies for investment purposes for a limited period. Start-up companies A 24-month exclusion applies after the organization of a foreign entity investing in assets with the intent to operate a non-fi business. The 24-month exclusion is not available to a venture fund or other investment fund that invests in start-up entities. Nonfinancial entities in liquidation or emerging from reorganization or bankruptcy The exemption applies to entities that were not FIs before the liquidation or reorganization and whose continued or recommenced operations (if any) are to be non-fi businesses. Hedging and financial centers of a nonfinancial group The exemption applies to a member of an expanded affiliated group (EAG) 1 if the member is primarily engaged in financing or hedging transactions with or for its affiliates that are not FFIs, and it renders those services only to affiliates, provided the group engages in a non-fi business. 1 An EAG is generally an affiliated group as defined in the consolidated return rules, with certain changes. A partnership or any other entity (other than a corporation) will be treated as a member of an EAG if the entity is controlled (within the meaning of section 954(d)(3)) by members of the EAG. World Tax Advisor 3 of 10 Copyright 2010, Deloitte Global Services Limited.

4 Insurance companies Treasury and the IRS plan to issue regulations treating entities whose business consists solely of issuing insurance or reinsurance contracts without cash value as non-fis for chapter 4 purposes. Those would include most property and casualty insurance or reinsurance contracts or term life insurance contracts. No comparable exemption is provided for issuers of life insurance or annuity contracts with an investment component, although comments on the treatment and definition of those contracts have been requested. Entities with certain identified owners The notice provides that FFIs whose direct or indirect account holders consist solely of individuals (e.g. a family trust settled by one person for the sole benefit of his or her children) or of excepted NFFEs 2 will be deemed compliant FFIs if the withholding agent: Specifically identifies each individual, specified U.S. person 3 or excepted NFFE that has an interest in the entity, either directly or through ownership in one or more other entities; Obtains from each such person the documentation that the withholding agent would be required to obtain from that person under the notice if the person were a new account holder or a direct payee of the withholding agent; and Reports to the IRS any specified U.S. person identified as a direct or indirect interest holder in the entity. Foreign retirement plans Treasury and the IRS intend to issue guidance stating that some foreign retirement plans will constitute a class of persons posing a low risk of tax evasion under section 1471(f)(4) and will thus be exempt from section 1471(a). To qualify, the plan must: Qualify as a retirement plan under the law of the country where the plan is established; Be sponsored by a foreign employer; and Not allow U.S. participants and beneficiaries other than employees who worked for the foreign employer in the country where the plan is established during the time the benefits accrued. 2 Excepted NFFEs are: (1) corporations whose stock is regularly traded on an established securities market; (2) corporations that are members of the same EAG as a regularly traded corporation described in (1); (3) entities organized in U.S. territories; (4) any foreign government, any political subdivision or any wholly owned agency or instrumentality of any of the foregoing; (5) any international organization or wholly owned agency or instrumentality thereof; (6) any foreign central bank of issue; or (7) any other class of person identified by Treasury for this purpose. 3 Section 1473(3) generally defines a specified U.S. person as any U.S. person, other than (A) Any corporation the stock of which is regularly traded on an established securities market; (B) Any corporation that is a member of the same EAG (as defined in section 1471(e)(2) without regard to the inclusion of noncorporate entities in the EAG) as a corporation the stock of which is regularly traded on an established securities market; (C) Any organization exempt from taxation under section 501(a) or an individual retirement plan; (D) The U.S. or any wholly owned agency or instrumentality thereof; (E) Any state, the District of Columbia, any possession of the U.S., any political subdivision of any of the foregoing, or any wholly owned agency or instrumentality of any one or more of the foregoing; (F) Any bank (as defined in section 581); (G) Any real estate investment trust (as defined in section 856); (H) Any regulated investment company (as defined in section 851); (I) Any common trust fund (as defined in section 584(a)); and (J) Any trust that - (i) is exempt from tax under section 664(c), or (ii) is described in section 4947(a)(1). World Tax Advisor 4 of 10 Copyright 2010, Deloitte Global Services Limited.

5 It is likely that such a plan generally would also meet the definition of an FFI and thus be exempt from withholding under section 1472(a). Observation: If this is read literally, many foreign retirement plans might not satisfy all three requirements. For example, would a plan fail because its participants accrue benefits while working for the plan sponsor, even though not all of their work during the period during which benefits accrued was performed in the country where the plan is established, but rather in a neighboring country? Also, would a plan fail because an employee s spouse including a spouse who is a U.S. person could be a beneficiary, thus making the plan one that allows U.S. beneficiaries other than employees? U.S. branches of FFIs The notice says FFIs receiving withholdable payments solely through their U.S. branches will not be exempt from the requirement to enter into an FFI agreement to avoid section 1471(a) withholding. Payments received by a U.S. branch for its own account may be effectively connected with the conduct of a trade or business in the U.S. and thus excluded from the definition of withholdable payment under the ECI (income effectively connected with a U.S. trade or business) exclusion of section 1473(1)(B). Treasury and the IRS intend to issue regulations regarding the application of the ECI exclusion by withholding agents making payments to U.S. branches of FFIs. However, the notice says Treasury and the IRS do not intend the regulations to incorporate the type of ECI presumption that applies under chapter 3 to payments made to some U.S. branches of U.S.-regulated foreign banks and insurance companies. Comments are requested as to other possible rules or methods that withholding agents could use to determine the application of the ECI exclusion. Observation: Payments FFIs receive for their own account that are subject to split allocation between ECI and non- ECI should merit special consideration, in future guidance, for receiving the exemption otherwise applicable to payments that are wholly ECI. Such allocations are commonly made for income from large volumes of transactions by broker-dealers and banks that conduct securities-dealing activities in multiple locations. Also, increasing numbers of institutions are eligible for split allocations for their business profits in general under the authorized OECD approach agreed to by the U.S. for use under its tax treaties with Belgium, Bulgaria, Canada, Germany, Iceland, Japan and the U.K. In cases when a U.S. branch of an FFI receives a withholdable payment as an intermediary, Treasury and the IRS are considering permitting the U.S. branch to document its account holders for chapter 4 withholding purposes under the requirements to be imposed on USFIs (discussed below). Treasury and the IRS anticipate that the regulations will include rules coordinating the chapter 4 reporting required of FFIs with U.S. branches and other U.S. tax reporting obligations to avoid duplicative reporting of accounts maintained by the U.S. branch of the FFI. Controlled foreign corporations The notice indicates that Treasury and the IRS have decided that FFIs that are also CFCs will not be treated as deemedcompliant FFIs (meaning that they must become participating FFIs to avoid withholding under chapter 4). The notice provides a rationale for this decision that discusses the ways in which the documentation and reporting requirements to which CFCs are currently subject are less stringent than those that apply to FFIs under chapter 4. Treasury and the IRS anticipate coordinating the chapter 4 reporting imposed on CFCs with other U.S. tax reporting obligations, with the objective of avoiding duplicative reporting. Observation: The Joint Committee on Taxation s 23 February 2010 technical explanation of the HIRE Act indicates that deemed-compliant FFIs may include certain [CFCs] owned by U.S. financial institutions and certain U.S. branches of [FFIs] that are treated as U.S. payors under present law. Given that language, it was surprising that the drafters of the notice decided to exclude CFCs as a group from the category of deemed-compliant FFIs. Territory-organized FIs The notice states that Treasury and the IRS generally do not intend to treat FIs organized in the U.S. territories (territoryorganized FIs) as FFIs. Also, regarding territory-organized FIs that receive withholdable payments in the capacity of an intermediary, the notice says Treasury and the IRS intend to address the lack of guidance in sections 1471 and 1472 as to whether withholding agents must withhold on payments to FFIs and NFFEs through territory-organized FIs. Treasury and the World Tax Advisor 5 of 10 Copyright 2010, Deloitte Global Services Limited.

6 IRS plan to permit a territory-organized FI that receives a withholdable payment in its capacity as an intermediary to represent in writing to its withholding agent that, for purposes of the payment, it is assuming the role of a U.S. withholding agent under sections 1471 and 1472, and that if it does so, it would not itself be subject to chapter 4 withholding on the payments it receives in that capacity. Foreign charitable organizations The notice requests comments on whether other specific classes of foreign entities should be excluded from the definition of an FFI, characterized as deemed-compliant FFIs or identified as posing a low risk of tax evasion under section 1471(f). The notice mentions foreign charitable organizations as a possible subject of comments. Participating FFIs and withholding agents To avoid withholding under section 1471 by entering into an FFI agreement, thereby becoming a participating FFI, the FFI must agree to obtain, verify, perform due diligence and report information about its account holders. The notice also provides details about what withholding agents, such as USFIs, must do when determining whether to withhold under section 1471(a). Observation: Section 1471(e)(1) provides that the section 1471(b) and (c)(1) requirements apply to U.S. accounts maintained by an FFI that enters into an FFI agreement and, except as otherwise provided by the Secretary, to U.S. accounts maintained by a financial institution that is a member of the same EAG, other than any FFI that also enters into an FFI agreement or is a deemed-compliant FFI. The notice does not appear to express any intent to exercise the authority mentioned above to provide exceptions to this rule. Consequently, it appears that, for example, the FFI agreement of any one fund in a family of funds would require the FFI to obtain, verify and report information about the accounts in all funds in that family. The notice provides a detailed explanation of what is required to comply with such an FFI agreement. The participating FFI must identify and report U.S. accounts. For accounts held by entities, the FFI must sort through and determine whether the accounts are to be treated as: U.S. accounts; Accounts of participating FFIs; Accounts of deemed-compliant FFIs; Accounts of nonparticipating FFIs; Accounts of entities described in section 1471(f); Accounts of recalcitrant account holders; Accounts of excepted NFFEs; Accounts of other NFFEs; or Other accounts. While this is necessary to satisfy the FFI agreement, it is also necessary for any withholding agent for example, a USFI to make similar determinations regarding the recipients of withholdable payments (see chart). Required determination for compliance on entity-held accounts USFI PFFI 1 U.S. person / U.S. accounts 2 X X Participating FFIs X X Deemed-compliant FFIs X X Non-participating FFIs X X Entities described in section1471(f) X X Excepted NFFEs X X Recalcitrant account holders X Other NFFEs X X Other accounts X World Tax Advisor 6 of 10 Copyright 2010, Deloitte Global Services Limited.

7 Required determination for compliance on entity-held accounts 1 For USFI, the required determination is made on the individual or entity itself. Alternatively, in the case of PFFI, the required determination is made on the account of the relevant entity. 2 U.S. person USFI; U.S. Accounts Participating FFI. In so doing, FFIs will be allowed to rely on forms W-9 and W-8BEN for purposes of chapter 4. To ease this complex identification process, the notice announces that the IRS will issue employer identification numbers to participating FFIs. Until withholding agents can verify the status of FFIs with the IRS through this mechanism, withholding agents and participating FFIs will be permitted to rely on certifications provided by FFIs as to their status as participating FFIs, unless the withholding agent or participating FFI knows or has reason to know that the certification provided is incorrect. Treasury and the IRS are considering requiring USFIs to report information about the identity of any entity that provides documentation indicating that it is a participating FFI but does not provide a valid FFI EIN. The notice also says Treasury and the IRS are considering permitting withholding agents other than USFIs to rely on a foreign entity s certification as to its classification for chapter 4 purposes, provided there is no reason to believe the certification is unreliable or incorrect. These requirements would also apply to withholdable payments made by FFIs and USFIs to NFFEs that are not holders of financial accounts maintained by the FI. Observation: While the various classes of recipients of withholdable payments may reduce the burdens of section 1471 on those recipients, they increase the burden on withholding agents and participating FFIs that must categorize all recipients of withholdable payments under the classifications. Moreover, USFIs have little guidance as to what information they may rely on in making these determinations. The notice says only that a USFI may rely on the certification of participating status by an FFI, and it says nothing about reliance by USFIs on certifications or other documentation as to, for example, deemed-compliant FFI status or section 1471(f) status. A form or forms similar to the W-8 series, certifying each of the relevant statuses for section 1471 purposes, should be developed by the IRS for account holders and recipients of withholdable payments to provide to their withholding agents and FFIs, and on which all withholding agents and FFIs can generally rely for section 1471 purposes. 4 The notice also provides detailed guidance regarding the due diligence required to obtain information about each account maintained by an FFI to determine whether it is a U.S. account and to report information (including average account balances) on the U.S. accounts. The guidance contains separate rules for financial accounts held by individuals and for financial accounts held by entities. Separate rules are also provided for each in connection with preexisting accounts and new accounts. For preexisting individual accounts, an FFI may elect to treat a depository account as a non-u.s. account if the average of the balances or values of all depository accounts held by the account holder was less than USD 50,000 during the calendar year preceding the entry into force of the FFI agreement (the de minimis exception). Observation: Most financial institutions do not have the systems to use the de minimis exception. Also, the notice is unclear as to whether the exception applies across all accounts in all FIs in the same EAG. Section 1471(d)(1)(B) provides that the Treasury Secretary may, through regulations, treat all FIs that are members of the same EAG as a single FI for purposes of the de minimis rule. Such a rule would make the de minimis exception even less meaningful. Regarding preexisting accounts, the notice provides presumptions and allows the identification of those accounts based on electronically searchable information in the FFI s files. For new accounts, the determination generally must be based on all information collected by the FFI, which in the case of entity accounts clearly means regardless of whether the information is available in electronically searchable files. For accounts held by individuals, the FFI must re-verify within two years after the 4 See U.S. Treasury regulation section (b)(2)(i), providing that a withholding agent may determine the foreign or U.S. status of a payee on the basis of the withholding certificate (i.e. a Form W-8BEN, Form 8233 or Form W-9) provided to it by the payee. World Tax Advisor 7 of 10 Copyright 2010, Deloitte Global Services Limited.

8 FFI agreement enters into effect whether certain accounts continue to be properly treated as other than U.S. accounts. Also, the standards for existing and new individual accounts merge into a single standard beginning five years after the FFI agreement enters into effect. If an FFI is unable to obtain the requisite information for an account, the account will be considered a recalcitrant account (that is, an account for which the holders fail to comply with reasonable requests for information by a participating FFI). Observation: A participating FFI is subject to consequences from an account becoming recalcitrant, including reporting requirements regarding the recalcitrant accounts and withholding on pass-through payments on those accounts. Also, the notice says Treasury and the IRS are requesting comments on whether, and in what circumstances, they should consider terminating FFI Agreements due to the number of recalcitrant account holders remaining after a reasonable period of time. That termination could be a draconian result. For example, in the case of accounts opened in the future by individuals, it may be relatively simple for a participating FFI to obtain documentary evidence establishing U.S. or non-u.s. status from the individual opening the account something that the notice requires for new individual accounts. When those accounts were opened in the past, if the FFI did not already have that information on file, it could often be costly, time consuming and difficult to obtain evidence establishing the U.S. or non-u.s. status of every individual account holder. Observation: If a financial institution has an account holder with both new and existing accounts, the transition rules for existing accounts are likely to have less significance, given that information obtained on new clients will likely be included in electronically searchable systems. Thus, although the notice does not say that the opening of a new account by an existing account holder will automatically cause the U.S. (or other) status of the existing account to be conformed to that of the new account, the requirement to base the treatment of the existing account on all electronically searchable information might in practice have that effect. Treasury and the IRS intend to issue regulations providing that, for a participating FFI that maintains an account of another participating FFI, only the participating FFI that has the more direct relationship with the investor or customer will have to report the information required under section 1471(c). 5 Observation: The notice does not refer to or describe the coordination issues that are expected to arise for FFIs that also engage in securities lending activities and that choose to certify themselves as qualified securities lenders (QSLs) under the HIRE Act guidance described in Notice Under that guidance, securities borrowers are generally exempt from chapter 3 withholding on substitute dividend payments made to QSLs, and QSLs are relieved of their gross-basis tax liability on substitute dividend payments they receive if those payments are related to substitute dividend payments they make on securities borrowings from other securities lenders, which may themselves be QSLs. QSLs may also be participating FFIs. In the case of a QSL-to-QSL substitute dividend payment, the QSL payer does not appear to stand in a direct relationship with an investor or customer targeted by the withholding, due diligence and reporting considerations motivating chapter 4. Moreover, these activities are likely to constitute a class of highvolume transactions among multiple participating FFIs. Thus, QSLs that keep carefully managed books with other QSLs and U.S. counterparties should be suitable candidates for the relief from duplicative reporting. 5 See also section 1471(d)(1)(C) (the term U.S. account shall not include any financial account in an FFI if: (1) the account is held by another financial institution that meets the requirements of section 1471(b), or (2) the holder of that account is otherwise subject to information reporting requirements that Treasury determines would make the reporting required by this section regarding U.S. accounts duplicative). World Tax Advisor 8 of 10 Copyright 2010, Deloitte Global Services Limited.

9 Payments on obligations outstanding on 18 March 2012 Chapter 4 is generally effective for payments made after 2012, but it does not require any amount to be deducted or withheld from any payment under any obligation outstanding on 18 March 2012, or from the gross proceeds from any disposition of an obligation. The notice says Treasury and the IRS intend to issue regulations stating that the term obligation for this purpose means any legal agreement that produces or could produce withholdable payments, except it does not include any instrument treated as equity for U.S. tax purposes or any legal agreement that lacks a definitive expiration or term (e.g. savings deposits or demand deposits). Also, a legal agreement that produces withholdable payments excludes brokerage, custodial and similar agreements to hold financial assets for the account of others and to make and receive payments of income and other amounts in connection with those assets. Material modifications of obligations will result in the treatment of the obligations as being newly issued. For obligations that are indebtedness for U.S. tax purposes, a material modification means any significant modification as defined in U.S. Treasury regulation section Outside the indebtedness context, the meaning of material modification will be determined based on the facts and circumstances. Miscellaneous The notice also says Treasury and the IRS are considering ways to minimize the burden on participating FFIs, including whether to exempt a participating FFI from the section 1471(b)(1)(D)(i) obligation to withhold on pass-through payments to individual recalcitrant account holders when the IRS can obtain information about the identities of the account holders through an information exchange request to a foreign jurisdiction. Treasury and the IRS also anticipate providing an exception to section 1472 withholding by a withholding agent other than an FI for a payment made to an NFFE engaged in an active trade or business. The notice says proposed regulations will be issued with enough time to implement the systems and processes necessary to fully comply with the new withholding, documentation and reporting obligations (which will require that institutions and others exercise due diligence and collect information that is not necessarily required today). The notice requests comments (and identifies many issues on which comments are requested) by 1 November. Conclusion It seems reasonable to plan for the future under the assumption that the notice represents the foundation of detailed regulations that Treasury will issue. USFIs and other withholding agents, FFIs, NFFEs, their managers and administrators, and all other intermediaries would be wise to carefully consider the notice now in order to assess their chapter 4 exposures and the resources they will need in 2010 through 2012 to fulfill their responsibilities and modify their information reporting and withholding systems. That assessment may be critical for deciding whether to submit comments to Treasury and the IRS on the need for guidance not spelled out in the notice (or for changes to the guidance already expressly mentioned in the notice), as well as to become compliant with chapter 4 (as well as chapters 3 and 61) within the time frame mandated in the HIRE Act and the notice. Harrison Cohen (Washington, DC) Director Deloitte Tax LLP harrisoncohen@deloitte.com Denise Marie Hintzke (Washington, DC) Director Deloitte Tax LLP dhintzke@deloitte.com Paul Epstein (Washington, DC) Director Deloitte Tax LLP pepstein@deloitte.com Gretchen Sierra (Washington, DC) Principal Deloitte Tax LLP gretchensierra@deloitte.com World Tax Advisor 9 of 10 Copyright 2010, Deloitte Global Services Limited.

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