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Section 1446(f) – The Confounding and Unavoidable US Tax Withholding Regime That Applies to Nearly All Transfers of Partnership Interests
In this article, originally published in Tax Management International Journal, Davies lawyers Zachary Kling, Jonathan Rhein, Jennifer Lee and Peter Glicklich explain what foreign partners, including Canadians, investing in U.S. partnerships need to know about Section 1446(f) of the Internal Revenue Code.
The article covers the exceptions available to sellers to avoid having taxes withheld, the burden of proof required to apply these exceptions and the burden of compliance when no exception applies.
It also discusses the rules applicable to sales of non-publicly traded partnership interests effected through brokers, as well as recent guidance narrowing the circumstances under which brokers are required to withhold taxes.
