US IRS issues final reporting, record keeping rules for foreign-owned disregarded domestic entities

The US IRS on December 13 published final tax regulations (T.D. 9796) under sections 6038A and 7701 that require wholly foreign-owned domestic disregarded entities to be treated as a domestic corporations, separate from their owners, for purposes of reporting, record maintenance, and associated compliance requirements.

Such companies are subject to the rules that apply to 25 percent foreign-owned domestic corporations under section 6038A

The Service said that the augmented reporting requirements will enhance the United States’ compliance with international standards of transparency and exchange of information for tax purposes and will strengthen the enforcement of US. tax laws.

The regulations finalize proposed regulations (81 FR 28784) issued May 10.

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