DRAFT SUBMISSION TO TREASURY REGARDING SAFE HARBOR PROCEDURES FOR IDENTIFYING QUALIFIED FOREIGN CORPORATIONS

1 See Institute Memorandum to Tax Members No. 65-03 [16824], dated November 28, 2003. 2 See Institute Memoranda to Tax Members No. 36-03 [16341], dated July 22, 2003, and No. 40-03 [16404], dated August 1, 2003. 3 See Institute Memorandum to Tax Committee No. 14-04 [17414], dated April 23, 2004. [17543] May 17, 2004 TO: TAX COMMITTEE No. 17-04 RE: DRAFT SUBMISSION TO TREASURY REGARDING SAFE HARBOR PROCEDURES FOR IDENTIFYING QUALIFIED FOREIGN CORPORATIONS In Notice 2003-79, Treasury established a safe harbor for persons required, as payors, to file information returns in 2003 with respect to qualified dividend income from foreign corporations.1 Notice 2003-79 also announced Treasury’s intention to adopt a certification- based safe harbor for reporting in 2004 and later years. The Institute met with Treasury officials both before the issuance of Notice 2003-79 and more recently in an effort to explain the need for safe harbors for payors reporting foreign qualified dividends and also the reasons why we believe a certification-based safe harbor is unlikely to be of significant benefit.2 Although Treasury was responsive to the concerns we raised in establishing the safe harbor for 2003, Treasury officials have recently indicated they intend to move forward with a certification approach for 2004 and future years. Attached is a draft submission, based on the Committee’s recent conference call,3 that reiterates the Institute’s concerns with a certification-based safe harbor for 1099 reporting of qualified dividend income. Please provide any comments on the draft submission to the undersigned (dorlin@ici.org or 202/371-5436) or Keith Lawson (lawson@ici.org or 202/326- 5832) by Monday, May 24, 2004. David Orlin Assistant Counsel Attachment (in .pdf format)