The White House Office of Management and Budget has begun reviewing proposed rules relating to Section 1446(f), which potentially requires a purchaser of partnership equity to withhold on a foreign seller.  The office has up to 45 days to review the proposed rules before they are published.

In September, the Structured Finance Industry Group (SFIG) submitted comments to the IRS regarding the application of Section 1446(f) to middle market collateralized loan obligations (which often are structured as partnerships for tax purposes) and other securitizations.

In the letter, SFIG requested guidance on the application of this new withholding requirement to holders of equity interests that are traded through a U.S. financial institution, such as the Depository Trust Company.

Cadwalader tax partners Jason Schwartz and Gary Silverstein assisted in drafting the SFIG letter.