Global Tax Adviser
January 17, 2012
IRS Offers Last Minute Reprieve for U.S. Cost Basis
Ian Bristol and Connie Lee
Toronto, U.S. Corporate Tax
The IRS has announced transitional relief (four days before the January 17
deadline) for a corporate issuer, including
certain Canadian corporations, that must report a corporate action that
affects the tax basis of all holders of a “specified security” (e.g., bond,
share, note) by filing Form 8937, "Report of Organizational Actions
Affecting Basis of Securities" by January 17, 2012.
The IRS has now said
that it will not impose penalties for 2011 actions if a taxpayer makes a "good faith"
attempt to comply with the measures, including filing Form 8937 and issuing
a written statement about an action to its security holders or,
alternatively, posting the required information on its primary website.
The rules to report corporate actions affecting tax basis of stock (other
than stock of a regulated investment company (RIC) or stock acquired in
connection with a dividend reinvestment plan (DRIP)) became effective
January 1, 2011.
The due date for providing calendar year 2011 corporate
action returns (or website postings) is January 17, 2012.
The IRS stated that it recognizes that Form 8937's release date of
January 6, 2012 provided
a limited timeframe before its due date. As a result, the IRS said it will
not impose penalties for reporting incorrect information against issuers
related to filing and providing Form 8937 for 2011 organizational actions,
provided that issuers make good-faith efforts in:
- Timely posting Form 8937 or the required information on the issuers’
primary public websites
- Accurately filing Form 8937 and providing the corresponding issuer
For more information, contact your KPMG adviser.