New Proposed and Final Regulations Address Withholding on “Dividend Equivalents”

Section 871(m) of the Internal Revenue Code, enacted in 2010, treats “dividend equivalents” as U.S.-source dividends for withholding tax purposes.  On December 4, 2013, the Treasury Department and the Internal Revenue Service (the “IRS”) released new proposed regulations (the “2013 Proposed Regulations”) and final regulations (the “2013 Final Regulations”) interpreting Section 871(m).