• IRS Internal Memorandum Attacks Lending Activities by Non-U.S. Investors
  • October 13, 2009
  • Law Firm: Proskauer Rose LLP - New York Office
  • On September 22, 2009, the Internal Revenue Service (the "IRS") issued an internal memorandum from the Office of Chief Counsel to the Director of Field Operations in Manhattan (Financial Services) discussing the U.S. federal income tax treatment of certain lending activities by a non-U.S. corporation. In the memorandum, the IRS concluded that a non-U.S. corporation is engaged in a U.S. trade or business if it conducts certain lending activities through a U.S. agent engaged to perform services such as locating borrowers, performing credit analyses and negotiating borrowing terms. The memorandum concludes that, under such circumstances, the non-U.S. corporation's income from those activities would be subject to U.S. federal income tax and the non-U.S. corporation would be required to file U.S. federal income tax returns.