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June 28, 2022

IRS to defer reporting for certain derivative payments in forthcoming base erosion anti-abuse tax (BEAT) regulations

The IRS has announced (Notice 2022-30) that regulations under IRC Sections 59A and 6039A (TD 9885; see Tax Alert 2019-2154) will be amended to defer the applicability date of some provisions relating to reporting qualified derivative payments (QDPs) until tax years beginning on or after January 1, 2025. In June 2021, the IRS had announced (Notice 2021-36) its intention to amend TD 9885 to delay the applicability date until tax years beginning on or after January 1, 2023. The new notice explains that Treasury and the IRS "continue to study these provisions and have determined that it is appropriate to further extend the transition period."

In the interim, certain financial services taxpayers should continue to be able to benefit from the QDP exception to base erosion payments without detailed reporting. The ability to continue to rely on this exception should enable them to better manage their BEAT position.