FROM THE OFFICE OF PUBLIC AFFAIRS

Today the Treasury Department issued final regulations that are intended to encourage foreign corporations and individuals to comply with U.S. tax laws.

Foreign corporations and individuals with business operations in the United States are required to file U.S. tax returns.  If they do not file the required U.S. tax return on a timely basis, they generally are denied the ability to claim any deductions from their U.S. taxable income.  These regulations, which replace temporary regulations issued last year, allow the IRS to waive this denial of deductions in appropriate circumstances, provided that the taxpayer comes forward and cooperates with the IRS.

The regulations will facilitate U.S. tax compliance by foreign taxpayers that become aware of their U.S. tax return filing obligations only late in the process.  Providing the IRS with this flexibility in the handling of these taxpayers' returns for prior years in appropriate cases will help to ensure that these taxpayers can be brought into the U.S. tax system where they belong.

The text of the regulations is attached.