February 17, Douglas Shulman Commissioner Internal Revenue Service 1111 Constitution Ave., N.W. Washington, DC 20224

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1 February 17, 2012 Douglas Shulman Commissioner 1111 Constitution Ave., N.W. Steven Miller Deputy Commissioner for Services and Enforcement 1111 Constitution Ave., N.W. Emily McMahon Acting Assistant Secretary (Tax Policy) U.S. Department of the Treasury 1500 Pennsylvania Avenue, N.W. Washington, DC Steven Musher Associate Chief Counsel (International) Re: Comments of the Organization for International Investment in Response to Request for Comments Addressing Proposed and Temporary Regulations Under I.R.C. Section 6038D The Organization for International Investment ( OFII ) welcomes the opportunity to provide comments regarding Proposed and Temporary Regulations issued December 19, 2011, under section 6038D of the Internal Revenue Code. OFII is a business association representing U.S. subsidiaries of many of the world s largest foreign multinational corporations. As OFII represents multinational corporations in all industries, our comments reflect member concerns across industry lines. The U.S. subsidiaries and U.S. branches of foreign multinational corporations are significant contributors to the health of the U.S. economy and major employers in the United States.

2 They directly employ 5.3 million Americans roughly five percent of the private sector workforce. These companies support an annual U.S. payroll of more than $400 billion, account for 17 percent of U.S. manufacturing jobs, produce nearly 21 percent of U.S. goods exported, and spend more than $40 billion annually on U.S. research and development activities. The United States government has taken important recent steps in recognizing the importance of the foreign multinational community to U.S. economic growth and U.S. employment. Last year, President Obama issued an Open Investment Statement reaffirming America s commitment to fair treatment for foreign investors. Additionally, the President signed an executive order establishing SelectUSA, a government-wide initiative focused on attracting and retaining business investment in the United States including efforts specifically tailored to attract non-u.s. companies. Furthermore, Secretary of Commerce John Bryson has declared increasing investment from abroad to be one of his principal priorities as Secretary. While these are important developments, there is much more to be done in order to make the United States a more competitive location for inbound investment. Section 6038D, which was enacted as part of the Foreign Account Tax Compliance subtitle of the Hiring Incentives to Restore Employment ("HIRE") Act (hereinafter referred to as FATCA ), requires individuals (and certain entities) to report specified foreign financial assets to the ( IRS ) for taxable years beginning after March 18, Persons affected by section 6038D must attach Form 8938, Statement of Specified Foreign Financial Assets, to their U.S. federal income tax returns. Section 6038D defines a specified foreign financial asset as any financial account maintained by a foreign financial institution, and to the extent not held in an account at a financial institution: (i) any stock or security issued by any person other than a U.S. person; (ii) any financial instrument or contract held for investment that has an issuer or counterparty that is not a U.S. person; and (iii) any interest in a foreign entity. When reporting a financial account, the individual must include the name and address of the financial institution in which the account is maintained, as well as the account number. For any stock or security, the name and address of the non-u.s. issuer, as well as information necessary to identify the class or issue of which the stock or security is a part, must be reported. In the case of any other instrument, contract, or interest, the names and addresses of all issuers and counterparties must be reported together with the information necessary to identify the instrument, contract, or interest. Under section 6038D, the maximum value of the asset during the taxable year must also be reported. However, an individual is not required to report under section 6038D unless the individual s aggregate specified foreign financial assets exceed certain thresholds (at least $50,000). An individual who fails to disclose the information required by section 6038D is subject to a penalty of $10,000, which may increase up to $50,000. However, the penalty is subject to a reasonable cause exception. 2

3 OFII appreciates and supports the goals of section 6038D to provide the IRS with greater transparency in order to more effectively detect possible tax evasion by U.S. persons by requiring such persons to report their specified foreign financial assets. However, we believe that this goal of increased transparency must be balanced so that it does not have a discriminatory impact on foreign multinational corporations. Moreover, to the extent possible, the rules under section 6038D should be applied so that they do not discourage the employment of U.S. persons by foreign multinationals. Foreign multinationals are major contributors to the U.S. economy and are major employers of U.S. persons. We believe that the goals of combating tax evasion and equitable treatment of foreign multinationals and their U.S. employees can and should be reconciled. Our comments below are divided into the following areas: (1) exclusion of assets obtained through employment-based compensation of employees of foreign multinationals from reportable specified foreign financial assets; (2) exclusion of assets held by participating foreign financial institutions ( FFIs ); (3) exclusion of publicly traded stocks and securities of foreign corporations from reportable specified foreign financial assets; (4) use of higher reporting thresholds for non-u.s. citizens seconded to the United States; and (5) other comments. 1. Exclusion of Assets Obtained Through Compensation Plans for Employees of Foreign Multinationals The regulations should exclude interests obtained through compensation plans for employees of foreign multinational corporations from the reporting requirements of section 6038D. The regulations do not specifically address if U.S.-based compensation plans for employees of a domestic subsidiary of a foreign-based multinational, are specified foreign financial assets and thus are subject to reporting under section 6038D, regardless of whether such plans include equity interests of a foreign entity, such as the foreign parent of the U.S. subsidiary. From a policy perspective, such amounts should not be subject to reporting because the U.S. subsidiary will report the compensation to the IRS and a related tax deduction will be reflected in the U.S. subsidiary s federal income tax return. To avoid any doubt, the proposed and temporary regulations should be clarified to specifically confirm the exclusion of U.S.- based compensation plans and any interests in a foreign entity held by such plans. With respect to foreign-based plans (e.g., in the case of a U.S. person who works directly for the foreign parent and participates in its plan), it is at best remote that a U.S. employee's interest in the equity of the employee's foreign employer would be held in furtherance of a scheme to evade U.S. taxation. This is all the more unlikely where the employer, or its parent company, is a publicly traded, or otherwise widely held, foreign multinational corporation. If the employee is directly employed by the foreign parent or a foreign affiliate in the foreign country, the compensation is, in all probability, reported to a local tax authority. Additionally, if the employee is employed by a U.S. branch of the foreign employer, that U.S. branch will report the compensation to the IRS and a related tax deduction will be reflected 3

4 on the branch s federal income tax return. The transparency of the compensation through third party information reporting to the tax authorities makes it an improbable vehicle for U.S. tax evasion. 1 Section 6038D(h) authorizes regulations that provide appropriate exceptions from the application of section 6038D in the case of classes of assets identified by the Secretary of the Treasury, including any assets with respect to which the Secretary determines that disclosure under section 6038D would be duplicative of other disclosures. We believe the Secretary should exercise this authority with respect to assets obtained through employee compensation plans. These may include equity-based compensation, retirement benefits, and deferred compensation, including foreign retirement and share-based plans. Multinational corporations, both foreign and domestic, frequently compensate their employees in part through equity-based incentive compensation, including stock options, and permit employees to purchase stock under a qualified or non-qualified employee stock purchase program. As a result, much stock-based compensation may not have a readily ascertainable value. More significantly, requiring each U.S. individual employed by a foreign multinational(either by a foreign company or U.S. subsidiary) to report all stock or stock rights in the foreign multinational corporation places a large burden on the employees of the foreign multinational corporation. However, U.S. persons working for a U.S.-based multinational employer (who would be receiving stock in a U.S. corporation) would not be subject to reporting requirements under section 6038D with respect to similar stock or stock rights (unless held in a financial account maintained by an FFI). Therefore, the burden placed on the employees of foreign multinational corporations is disproportionate to that placed on the employees of U.S. multinational corporations, having an unnecessary and unwarranted discriminatory effect in conflict with broader U.S. policy. Under the Proposed and the Temporary Regulations, it is not clear that reporting of unvested compensation awards is not required. 2 Unvested compensation generally requires that the 1 2 The IRS s Tax Gap for Tax Year 2006 Overview, released on January 6, 2012, states that the net misreporting percentage (defined as net misreported amount as a ratio of the true amount) for 2006 was only 8% for amounts subject to substantial information reporting (only 1% for amounts subject to substantial information reporting and withholding), as opposed to 56% for amounts subject to little or no information reporting, such as business income. The proposed and temporary regulations provide that a specified person has an interest in a foreign financial asset if any income, gains, losses, deductions, gross proceeds, or distributions attributable to the holding or disposition of the specified foreign financial asset are or would be required to be reported, included, or otherwise reflected by the specified person on an annual return. However, the proposed and temporary regulations also provide that a person has an interest in a specified foreign financial asset even if no income, gains, losses, deductions, credits, gross proceeds, or distributions are attributable to the holding or disposition of the specified foreign financial asset during the year. This language should generally exempt a specified person from having an interest in unvested rights for purposes of section 6038D (i.e., because section 83(a) makes clear that such unvested rights are generally not includible in income until the rights are transferable or not subject to a substantial risk of forfeiture), the proposed and temporary regulations should clarify that our reading is correct. 4

5 individual remain employed until a future date. The employee's right to the compensation may also be subject to certain performance criteria (e.g., attainment of a certain level of corporate earnings) and the employee will forfeit the compensation if the criteria are not met. Individuals have no rights to unvested compensation, whether it arises in a pension plan, deferred compensation plan, or through stock-based compensation. If a U.S. taxpayer has the ability to use these grants as security for a loan, payment to a creditor, or otherwise assign the right to the compensation, the grants would be subject to current U.S. income tax. Requiring the reporting of grants to which the employee has no rights does not further the policy of tax compliance and will place a significant burden on both the U.S. taxpayer and the multinational employer. These burdens would be increased because the valuation of such equity-based compensation, especially if subject to restrictions, may be particularly difficult and expensive to apply in practice. The Proposed and Temporary Regulations provide some relief with respect to valuation difficulties in the context of interests in foreign estates, pension plans, and deferred compensation plans, but they do not provide similar relief for employee stock plans or stockbased compensation. While there is no statutory burden on employers, there is a practical burden on the employers as they must be responsive to employees needs in this regard. A company would have to determine which valuation method is appropriate, apply the valuation method to each employee, and face the additional compliance burden of compiling this information and communicating it to each employee. With respect to retirement plans and deferred compensation arrangements, employees of foreign multinationals would (with the possible exception of the valuation problems) face similar burdens as those described above. Crucially, the categories of financial assets described above present a low risk of tax evasion by U.S. persons. Requiring reporting is not only unnecessary because of the low risk of tax evasion, but in the vast majority of cases is also duplicative, especially with respect to large foreign multinational corporations that have employees in the United States because such compensation will be reported to the IRS (e.g., on a Form W-2 or Form 1099). 3 Moreover, guidance in other areas of FATCA 4 recognizes that foreign retirement plans present a low risk of tax evasion. We therefore suggest that regulations be modified to clarify that assets obtained as compensation paid by foreign publicly traded or otherwise large or widely held corporations be designated as classes of assets that are excepted from the application of section 6038D. Such exception should include equity-based compensation, employee stock plans, retirement plans, and other deferred compensation arrangements. 3 4 As discussed above, income that is subject to information reporting is also vastly less likely to be misreported. See Proposed Regulations Sections (f)(2)(ii), (f). 5

6 Because Form 8938 is required to be attached to an individual s 2011 federal income tax return, due April 17, 2012, any revisions to the reporting of interests derived from employee compensation plans should be implemented as soon as possible by an IRS Notice informing taxpayers that they do not have to report excepted assets in spite of the instructions to Form Alternatively, if Treasury and the IRS do not exclude such interests generally, we would recommend exclusion of these interests if below a monetary threshold amount (independent of the general threshold amount under section 6038D). This would at least exclude many cases (i.e., the rank and file) that should not present material concerns of tax evasion. Since the interests typically reflect deferred compensation accumulating over the full employment term, we recommend that the threshold be reflective of the cumulative effect, such as $2,500, Exclusion of Assets Held in Financial Accounts Maintained by Participating Foreign Financial Institutions Section 6038D reporting should not be required for any assets held by specified U.S. persons (as defined in section 1473(3)) in accounts maintained by participating FFIs (i.e., FFIs meeting the requirements of Section 1471(b)). Section 6038D(b)(1) defines a specified foreign financial asset to include any financial account (as defined in section 1471(d)(2)) maintained by an FFI (as defined in section 1471(d)(4)). However, section 6038D(h) contemplates that assets with respect to which disclosure under section 6038D would be duplicative of other disclosures may be excepted from the application of section 6038D. The Proposed and Temporary Regulations under section 6038D provide, for example, that assets held by financial institutions that are U.S. payors (mainly, U.S. financial institutions, controlled foreign corporations, and U.S. branches of FFIs) are excluded from the reporting requirements of section 6038D. The Proposed and Temporary Regulations thus recognize that the authority to exclude from section 6038D reporting extends not only to assets that are being disclosed to the IRS by the U.S. person (e.g., on another form), but also to assets that are being disclosed to the IRS through other means, such as third party reporting. Participating FFIs are similar to U.S. payors in this regard. Under section 1471, a participating FFI must enter into an agreement with the IRS, as part of which the participating FFI performs due diligence to identify U.S. accounts and agrees that it will report to the IRS, inter alia, the name, address, and taxpayer identification number of each account holder; the account number; the account balance or value; and the gross receipts and withdrawals or payments from the account. Thus, the reporting that must be undertaken by participating FFIs under section 1471 provides all the information that section 6038D(c)(1) requires to be provided with respect to foreign financial accounts. Accordingly, if an individual or an entity (given that in some circumstances, section 6038D will be applied to entities) who is a specified U.S. person under section 1473(3) holds an 6

7 account maintained by a participating FFI, requiring information to be reported on Form 8938 with respect to such financial account would be duplicative. Both section 1471(d)(1)(C)(ii) and section 6038D(h)(1) contemplate that duplicative reporting under FATCA should be avoided. In giving Treasury and the IRS authority to provide relief from duplicative reporting, Congress recognized the burdens on U.S. persons and on financial institutions. We believe that it is therefore appropriate to provide the requested relief from duplicative reporting requirements. In addition, the Chapter 4 provisions, introducing the participating FFI regime, and section 6038D are driven by the same policy concerns, policing evasion of taxes by U.S. persons. Any interests reported under Chapter 4 are not interests that will be instruments for U.S. tax evasion and, thus, reporting these interests on Form 8938 is both duplicative and not needed to fulfill the purposes of section 6038D. Unlike section 6038D, however, the participating FFI regime under section 1471 will not be fully implemented until the end of In the interim, it would be appropriate to substitute Qualified Intermediaries ("QIs") as acceptable institutions. We recognize that the QI regime has different underlying policies and procedures and we would not, accordingly, recommend an exception for accounts held by QIs as a long-term rule. Rather, balancing the burdens placed on taxpayers and considering the likelihood that virtually all QIs will become participating FFIs, we believe using QIs in lieu of participating FFIs during the relatively brief period before the participating FFI program enters into effect achieves a fair and balanced approach, presenting a very low risk of opening a door to U.S. tax evasion. 3. Exclusion of Publicly Traded Stocks and Securities of Foreign Corporations The category of assets that are not specified foreign financial assets should be expanded to include publicly traded stocks and securities of foreign corporations, including debt securities that qualify for the portfolio interest exemption. Under the Proposed and Temporary Regulations, an asset held in a financial account maintained by an FFI is not required to be reported on Form 8938 separately from the reported financial account in which the asset is held. So, for example, if a U.S. individual holds stock in a foreign corporation in a brokerage account maintained by an FFI, as long as the U.S. individual properly reports the brokerage account on Form 8938, the individual will not have to separately report the stock in the foreign corporation on Form We believe that the treatment of publicly traded stocks and securities should be clarified. Publicly traded stocks and securities, unlike stocks and securities that are not publicly traded, are almost always held in an account, such as a brokerage account. If such account is with a U.S. financial institution, no Form 8938 reporting is required because the U.S. financial institution will already report any income or gains with respect to the account to the IRS. If such account is with a participating FFI, the account itself will be reported to the IRS, and if it is held by a "deemed-compliant" FFI, the government has already determined it presents a low risk of tax evasion. Although non-public securities may end up being directly held by the 7

8 beneficial owner or through an FFI that is neither a participating FFI or deemed compliant FFI, this would be such an exceptional occasion that it does not warrant the inclusion of publicly traded securities of foreign corporations in the category of reportable assets. Including publicly traded securities of foreign multinationals while not including publicly traded securities of U.S. multinationals, where neither creates a significant risk of being a vehicle for U.S. tax evasion, creates a discriminatory incentive in favor of U.S. stocks and securities, in conflict with the clear and laudatory policy of the United States to avoid discriminatory practices. We also note that publicly traded securities of foreign corporations are excluded from the definition of foreign financial accounts under Chapter 4. 5 Because the likelihood of U.S. individuals holding publicly traded stocks and securities directly (i.e., not in an account) is small and the inclusion of such securities has a discriminatory effect, the regulations should exempt publicly traded stocks and securities from Form 8938 reporting, regardless of whether such stocks and securities are held in financial accounts. U.S. persons may also hold securities of foreign corporations through American Depositary Receipts ( ADRs ). The proposed and temporary regulations do not specifically exempt ADRs from being specified foreign financial assets. We request that the treatment of ADRs as not being specified foreign financial assets be clarified. ADRs are a legal technique to facilitate the trading of foreign stocks. A U.S. financial institution will issue an ADR to a U.S. investor, and the U.S. financial institution will hold the underlying stock. ADRs are also generally held in a U.S. brokerage account. However, even where investors can request a physical receipt representing their shares rather than holding them through a brokerage account, dividend payments on the ADRs and redemptions will still be made through a U.S. financial institution and should therefore not present the tax evasion concerns to which section 6038D is directed because these amounts will be subjected to third party information reporting generally on Forms Moreover, publicly traded ADRs are already under the scrutiny of U.S. regulators because foreign corporations whose stock is traded on a U.S. exchange must register with the Securities and Exchange Commission. 4. Higher Reporting Thresholds for Non-U.S. Citizens Seconded to the United States The Proposed and Temporary Regulations provide that the reporting thresholds are increased for individuals residing outside the United States. An individual residing in the United States must file a Form 8938 if the individual s specified foreign financial assets have an aggregate fair market value exceeding either $50,000 on the last day of the taxable year or $75,000 at any time during the taxable year. These thresholds are doubled for married individuals filing a joint return. The Proposed and Temporary Regulations increase these limits to $200,000 and $300,000, respectively ($400,000 and $600,000, respectively, for married individuals filing a joint return) in the case of U.S. individuals residing abroad. We agree with Treasury s and the IRS s assessment that such individuals can reasonably be expected to have a greater amount 5 Section 1471(d)(2)(C). 8

9 of specified foreign financial assets for reasons unrelated to the policies underlying section 6038D. The same considerations apply to non-u.s. citizens who are seconded to the United States and, accordingly, the same higher thresholds should apply to them. Foreign multinational corporations frequently second non-u.s. individuals to the United States for several years. While such individuals reside in the United States and are likely to become U.S. individuals for purposes of section 6038D, they usually expect to return to their home country. Therefore, such individuals are likely to keep the majority of the assets they have accumulated in their home country, and such individuals can reasonably be expected to have a greater amount of specified foreign financial assets for reasons unrelated to the policies underlying section 6038D. 5. Other Comments a. Exclusion of Dual Residents Who Are Treated as Non-U.S. Residents Under a U.S. Income Tax Treaty From Specified U.S. Person Status Under the Proposed and Temporary Regulations, a resident alien who elects to be taxed as a resident of a foreign country pursuant to a U.S. income tax treaty s residency tie-breaker rules is a specified individual for purposes of section 6038D. The rules under section 6038D should respect the resolution by the United States and its treaty partners of dual residents. Individuals who are not treated as U.S. residents due to the application of a treaty tie-breaker rule have closer ties to the treaty partner and should not be treated as U.S. residents for purposes of section 6038D. b. Exclusion of Assets Reported on TD Under the Proposed and Temporary Regulations, assets reported on TD ("FBAR") must also be reported on Form The preamble to the Temporary Regulations provides that although certain information may be reported both on FBAR and Form 8938, the information required by the forms is not identical in all cases, and reflects the different rules, key definitions, and reporting requirements applicable to Form 8938 and FBAR reporting. However, in many cases, identical information will be reported on both Form 8938 and the FBAR. In such cases, the duplicative reporting requirements place an additional burden on persons filing both. It is appropriate to provide a rule that where all the information that is required to be reported on Form 8938 with respect to an asset is already reported on the FBAR, it will not be necessary to include such information on Form c. Converting Reporting Details in the Proposed and Temporary Regulations to Instructions 9

10 Treasury and the IRS have published a set of instructions to Form However, the Proposed and Temporary Regulations contain details addressing Form 8938 reporting that are not embodied in the instructions. We believe that these details would be better included in the Form 8938 instructions rather than in the regulations to accommodate changes in an expeditious manner and in order to ease compliance with the Form 8938 reporting requirements. d. Valuation of Equity-Based Compensation In section 1 above, we proposed that equity-based compensation be excluded from the reporting requirements of section 6038D. If our proposal is not adopted, however, we believe that significant valuation issues exist with respect to the value of interests in pension plans and any deferred compensation arrangements. We believe that the value of such assets should generally be considered as not readily ascertainable. The Proposed and Temporary Regulations provide some relief by stating that if the fair market value of such an asset is not readily ascertainable, then the value to be reported is the fair market value of distributions during the taxable year to the specified person as beneficiary or participant. We support this rule, but we believe future guidance should clarify that, until there is a current right to withdraw assets from the plan without penalty, the value of interests in pension plans and deferred compensation plans should be considered to be not readily ascertainable. e. Contractual Interests Under section 6038D(b)(2)(B), a specified foreign financial asset includes any financial instrument or contract held for investment that has an issuer or counterparty which is other than a United States person. Future guidance should clarify under what circumstances a contractual interest will be treated as a specified foreign financial asset. Such guidance should make clear that contracts entered into in the ordinary course of a trade or business of the issuer of the interest are not specified foreign financial assets and should specifically provide that employment contracts are not subject to section 6038D. f. Trade or Business Exception The Proposed and Temporary Regulations provide that an asset is not held for investment, and is, therefore, not a specified foreign financial asset, if the asset is used or held for use in the specified person s trade or business. The Proposed and Temporary Regulations base this test on Treas. Reg. Sec (c)(2), with certain modifications. We believe that, rather than looking to whether an asset is held for use in a specified person s trade or business, the appropriate standard should be a determination of whether an asset was acquired in the person s trade or business. For example, a U.S. sales agent may receive 10

11 securities in a foreign corporation as part of the compensation for closing a sale or finding the buyer, which receipt is in furtherance of the agent s business. Similarly, if the agent receives deferred payments contingent on the volume of sales, that contractual right should not be viewed as an asset held for investment. g. Reporting Threshold for Spouses of Individuals Residing Outside the United States The general rules of the Proposed and Temporary Regulations provide that the reporting threshold for aggregate assets held by spouses is twice the threshold for non-married individuals. This is accomplished by doubling the threshold for married spouses filing jointly, and by applying the regular threshold to each spouse if not filing jointly (so that each spouse would have thresholds of $50,000 and $75,000, which are combined for total thresholds of $100,000 and $150,000). However, the same rule does not apply in the case of spouses where only one spouse is a qualified individual under section 911(d)(1). In such a case, the thresholds are increased to $400,000 and $600,000 if the spouses file a joint return, but only increased to $250,000 and $375,000 if the spouses file separate returns ($200,000 and $300,000 for the spouse who is a qualified individual under section 911(d)(1) and $50,000 and $75,000 for the spouse who is not a qualified individual under section 911(d)(1)). It is unclear what policy reasons dictate such a disparate result, and we suggest that both married spouses filing separately should be entitled to use the higher thresholds even if only one spouse is a qualified individual under section 911(d)(1). The disparate treatment is not necessary to prevent tax avoidance because spouses can simply choose to file a joint return. We do not believe that section 6038D should impact the choice whether to file a joint or a separate income tax return in this manner. h. Exclusion of Certain Employer Trusts From Being Specified U.S. Persons Under the Proposed and Temporary Regulations, certain widely-held domestic entities are excluded from being specified U.S. persons. Currently, the Proposed and Temporary Regulations restrict the specified U.S. persons category to closely held corporations and partnerships, but they do not include a similar limitation for trusts. We believe that employer trusts for the benefit of employees should also be excluded from being specified U.S. persons, even if they hold stock of a foreign company. To avoid potential abuses, such an exception could require the trust to be for the benefit of more than a minimum number (e.g., 50) of employees. i. Optional Employer Reporting As we have discussed above, we believe where a U.S. employee participates in a U.S.-based compensation plan, the U.S. employee is not subject to reporting under section 6038D with respect to that plan, regardless of whether the employee has an interest in foreign securities through such plan. We have further recommended that foreign-based compensation plans be 11

12 excepted from the definition of a specified foreign financial asset. To the extent that, taking our discussion and recommendation into account, there still exists a possibility that an employee receives a specified foreign financial asset from an employer, the Proposed and Temporary Regulations should allow the employer the option, in lieu of employee reporting, to attach a statement, reflecting the interest at the time it is includible in income, to its U.S. tax return identifying each such specified foreign financial asset with a list of any beneficiaries (in the case of a retirement or deferred compensation plan) that do not receive a W-2. In the case of foreign multinational corporations that do not file a U.S. income tax return, such foreign corporations should be allowed to file a Form 1120-F, U.S. Income Tax Return of a Foreign Corporation, for this purpose, as is allowed for Form 8833, Treaty- Based Return Position Disclosure Under Section 6114 or 7701(b), purposes. We appreciate Treasury s and the IRS s efforts to issue guidance in respect to section 6038D in a timely manner. We would be happy to discuss these comments at your convenience. I can be reached at Thank you again for your time and kind consideration. Sincerely yours, Nancy McLernon President & CEO Organization for International Investment cc: Manal Corwin Deputy Assistant Secretary (International Tax Affairs) U.S. Department of the Treasury 1500 Pennsylvania Avenue, N.W. Washington, DC Michael Caballero Deputy International Tax Counsel U.S. Department of the Treasury 1500 Pennsylvania Avenue, N.W. Washington, DC Michael Plowgian Office of International Tax Counsel U.S. Department of the Treasury 12

13 1500 Pennsylvania Avenue, N.W. Washington, DC Michael Danilack Deputy Commissioner (International) Eric Corwin Deputy Chief Counsel (Technical) Patricia McClanahan Special Counsel to the Deputy Chief Counsel (Technical) Ron Dabrowski Deputy Associate Chief Counsel (International/Technical) Betty Ricca Deputy Associate Chief Counsel (International Field Services & Litigation) Craig Gilbert Special Counsel Joseph Henderson Attorney-Advisor, Associate Chief Counsel (International) 13