February 25, 2003
Tax Notes publishes the text of Willkie's recently filed comments on the Internal Revenue Service’s Temporary and Proposed Regulations Relating to Disclosure and Listing of Tax Shelter Transactions.
Tax Notes published the text of Willkie's recently filed comments on the Internal Revenue Service’s Temporary and Proposed Regulations Relating to Disclosure and Listing of Tax Shelter Transactions. Willkie’s comments, which focused on the proposed regulations as they relate to a broad range of investment vehicles such as private equity funds, merchant banking funds, hedge funds and commodity funds among others, appeared in the “Current and Quotable” section of the February 17 Tax Notes under the headline “Law Firm Criticizes Proposed Tax Shelter Disclosure Requirement.” In the comments, Willkie told the IRS that fund investments represent very significant amounts of capital raised by a large number of entities and that “unless modified, the Regulations will burden efforts of Funds to raise new capital by requiring tax shelter disclosure from virtually all Fund investors, and by requiring tax-shelter list maintenance by Fund sponsors and advisors.” The firm warned that these requirements are likely to adversely affect Funds’ efforts to raise investment capital by needlessly alarming potential investors. And at the same time, disclosure and list maintenance in respect to Fund offerings of interests for cash, and other routine Fund transactions, will produce a large volume of material that would be costly to process and of little value to the IRS. Willkie suggested limiting the application of the Regulations as they regard Fund investments and outlined a specific approach to follow should the IRS reject making available the regulated investment Company exception to Funds. Willkie also urged the deferral of the effective date of the Regulations, a suggestion that the government adopted. Willkie’s tax lawyers regularly represent clients before the IRS and Treasury Department on matters involving advance rulings as well as tax policy issues.