The Internal Revenue Service has released guidance about the reporting obligations for certain shareholders of passive foreign investment companies who are subject to an annual filing requirement under the recently passed HIRE Act.
President Obama signed the Hiring Incentives to Restore Employment Act of 2010 on March 18, which provides tax breaks to employers that hire and retain new employees. The law amends the Tax Code by adding a new Section 1298(f), which requires United States persons who are shareholders of a passive foreign investment company to file an annual report containing certain information that they will be expected to disclose. Section 1298(f) is effective on the date of enactment. However, the IRS is still developing further guidance regarding the reporting obligations under Section 1298(f).
In Notice 2010-34, the IRS said that persons who were required to file Form 8621, Return by a Shareholder of a Passive Foreign Investment Company or a Qualified Electing Fund, prior to the enactment of Section 1298(f) must continue to file Form 8621 as provided in the instructions to the form (for example, upon disposition of the stock of a PFIC, or with respect to a qualified electing fund under Section 1293).
Shareholders of a PFIC that were not otherwise required to file Form 8621 annually prior to March 18, 2010, will not be required to file an annual report as a result of the addition of Section 1298(f) for taxable years beginning before March 18, 2010.
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