The Depository Trust & Clearing Corporation’s (DTCC) 21st annual Global Tax Forum – held virtually this year over two morning sessions, April 21 and April 22 – featured several in-depth discussions around the implications of the new U.S. Sec.1446(f) regulations, which relates to the withholding obligations for certain dispositions by foreign partners of interests in partnerships engaged in a U.S. trade or business.
Other topics covered in the forum included DTCC’s myriad solutions to help participants comply with these new regulations and the capabilities of The Depository Trust Company’s (DTC) Settlement system.
DTCC’s Global Tax Forum, held annually since 1998, was cancelled last year in the uncertainty of the COVID-19 pandemic. Hosting virtually this year, however, meant that over 250 clients from around the globe were able to log in and participate in the two days of presentations.
Day 1: Sec 1446(f)
The first presentation of the forum featured Tara Ferris, Principal, Ernst & Young LLP. Ferris provided a deeper dive into 1446(f), a new tax code that requires brokers to withhold on amounts realized from sales of publicly traded partnerships by non-U.S. persons. For her presentation, Ferris summarized the Publicly Traded Partnerships (PTP) requirements and provided several examples of Qualified Notices.
The next session of the first day was a DTCC panel with Ian DeSacia, Director, Global Tax Services, and Steven Tang, Product Manager, Global Tax Services, discussing DTCC’s solutions to help participants comply with these new regulations, including Corporate Action Announcements disseminating information from Qualified Notices to help Participants comply with withholding on distributions, and also notifying them of exceptions to withholding on dispositions.
DeSacia, Tang and Ferris collectively fielded a variety of submitted questions from the forum participants, and Ellis Levy, DTCC Managing Director, Tax Counsel & Head of Corporate Tax, concluded the first day with a reminder to everyone that these are very complex regulations and clients should reach out their relationship managers for questions on DTCC solutions and with their own tax advisors about 1446(f).
Day 2: Settlement and Tax
The second day of the forum started with a panel discussion between Jay Klein, U.S. Tax Principal, PwC, and John Abel, DTCC Executive Director of Clearance and Settlement Product Management, moderated by Levy. The panel discussed various ways in which trades settle via DTCC’s clearing subsidiaries, DTC and National Securities Clearing Corporation (NSCC) and included examples of when 1446(f) withholding would apply, and which party would be responsible for enacting such withholding.
The final presentation returned to DeSacia, who discussed the planned roll out of DTC’s repository of Participant tax forms. The repository will provide Participants with one-stop shopping that will house member tax forms, instead of Participants requesting tax forms from each of their counterparties within DTC. The Regs allow DTC’s Participants to rely on tax forms provided by DTC for withholding and reporting tax under 1446(f). Additionally, Participants that do not want to have their tax form in the repository will have the ability to opt out.
DeSacia, Klein, Abel and Levy fielded questions for several minutes at the end of day 2. Levy reminded forum participants that the PowerPoint decks were available, and that recordings of the sessions would be made available, too.