Group Seeks Clarity From IRS on Foreign-Government Income Regs

The IRS and the Treasury Department should broaden safe harbors and provide more clarity on key concepts included in rules on how foreign governments’ income from US investments is treated for tax purposes, a bar group said.

The final and proposed regulations under Section 892, issued in December, “can be viewed as departures from current conservative market practices” in several areas, and that’s raised concerns for foreign sovereign investors and their advisers, the New York State Bar Association’s Tax Section said in a letter Friday.

Certain foreign-government income is generally exempt from US taxation, but that exemption doesn’t ...