Section 871(m) can subject certain dividend equivalent payments made or deemed made to non-U.S. persons on derivatives referencing U.S. equities to withholding and reporting requirements. Determining whether the rules apply and calculating the relevant dividend equivalent amount can require firms to evaluate complex instrument and payment data. 871(m) Tax Event Announcements helps support this process by sourcing dividend equivalent amounts directly from issuers and distributing timely, information-only announcements through DTCC infrastructure already used for corporate action processing.

By providing issuer-sourced dividend equivalent amounts in a consistent, fielded format, the service can reduce the need for firms to calculate these amounts independently, improve transparency into dividend equivalent activity and promote more consistent treatment of holders of 871(m) transactions.