IRS Announces Notice of Proposed Rulemaking Relating to U.S. Taxation of Foreign Investors in Certain Infrastructure Investments
On October 30, 2008, the Internal Revenue Service (the “IRS”) and the Treasury Department (the “Treasury”) issued a notice of proposed rulemaking (the “Notice”) stating that they are considering issuing regulations that would treat as “real property” investments in governmental licenses acquired in connection with ownership of U.S. infrastructure assets (e.g., toll bridges and toll roads). Non-U.S. persons, including non-U.S. investors in investment funds that own U.S. infrastructure assets, are likely to be affected if such regulations are indeed promulgated. Because the scope of the Notice is unclear, it is possible that these regulations would also affect non-U.S. shareholders in certain U.S. corporations operating in regulated industries.