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[print version]
FEI’s Committee on Corporate Treasury (CCT) and Committee on Taxation (COT) jointly sent a letter to the IRS and Treasury on July 21, 2009, which requests a 12-month extension of the IRS Notice 2008-91, extending short term loan periods from foreign affiliates from 30 and 60 days to 60 and 180 days. Extension of this Notice would significantly help US companies cope with short-term the liquidity issues.
On the whole, today’s market conditions are not significantly better than those that gave rise to the need for Notice 2008-91. While some indicators have improved, most have stayed fairly flat or even worsened in some cases. As such, the FEI committees recommended that the Notice be extended for 12 months to allow companies to cope with sudden and unexpected reductions in available credit, market volatility, and even liquidity needed for pension funding requirements.
Update on Treasury Department Action: On December 29, 2009, CCT and COT claimed victory on a successful outcome with the extension of tax relief for CFC Short-Term Loans through 2010. The Treasury Department and the IRS extended the application of Notice 2008-91 through the end of 2010, under which short-term loans from controlled foreign corporations (“CFCs”) to their U.S. parent corporations do not trigger tax under subpart F, to taxable years beginning before January 1, 2011. Notice 2008-91 provides that obligations held by a CFC and collected within 60 days are not required to be treated as “obligations” that would constitute an investment in U.S. property under section 956.
[print version]
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