Newsletter April 2019 | Volume XIV, Issue 4 Tax News and Developments North America Tax Practice Group Some Observations on Foreign-Derived Intangible Income As part of the Tax Cuts and Jobs Act (TCJA), Congress added section 250, which permits domestic corporations a deduction with respect to their global intangible low-taxed income (GILTI) and foreign-derived intangible income (FDII). On March 4, 2019, the Treasury and Internal Revenue Service published proposed regulations under section 250, which some view as the final piece of the puzzle with respect to the international tax regime enacted as part of the TCJA. The proposed regulations are lengthy (177 pages) and detailed and generally apply to taxable years ending on or after March 4, 2019. Comments on the proposed regulations are due by May 6, 2019. After enactment of the TCJA on December 22, 2017, the GILTI and BEAT (Base Erosion and Anti-Abuse Tax) regimes attracted much of the attention of US and foreign multinationals and international tax practitioners. FDII seemed to fly under the radar. More recently, taxpayers are paying significant attention to FDII and its benefits. For example, one large US manufacturer has reduced its effective tax rate by more than four percentage points as a result of FDII. Some background and intent behind FDII may be helpful in understanding as well as submitting comments on the proposed regulations. FDII, which its Senate drafters pronounce FOH-DEE, has its roots in former House Ways and Means Committee Chairman Dave Camp’s (R-MI) discussion draft on international taxation that was released on October 26, 2011. In that draft, Camp had three options for prevention of erosion of the US tax base. The third option, called Option C, which was the most discussed of the three anti-base-erosion options, provided that intangible profits from U.S. manufactured goods sold into foreign markets would receive a reduced tax rate. During the development process of the TCJA, the FDII regime came after the GILTI regime – it was designed to complement the GILTI regime. In other words, it was a one-two process – first GILTI and then FDII. FDII was never intended to be a patent or innovation box as described in OECD Base Erosion and Profit Shifting Project Action 5 final report. Rather, there was a concern that the GILTI regime could lead to the shifting or migrating of intangibles offshore. Generally, the earnings of a CFC can be placed into one of three categories: net deemed tangible income return (NDTIR), GILTI, and subpart F income. Another way of viewing the three categories is: regular business profits (NDTIR), supernormal or excess business profits (GILTI), and investment profits (subpart F income). The supernormal or excess business profits were thought to be generated primarily by intangible assets, hence the word “intangible” as part of the term “Global Intangible Low-Taxed Income.” In This Issue: Some Observations on Foreign-Derived Intangible Income As Wayfair Anniversary Approaches, Supreme Court Ready to Hear Another Case Involving Taxation of Out-ofState Taxpayers Canada’s Latest Federal Budget Proposes a Number of International Tax Measures Regulations Address FATCA Verification and Certification Requirements Baker McKenzie 2 Tax News and Developments April 2019 Generally, supernormal or excess business profits can be taxed at high tax rates without distorting economic behavior. The reasoning is that such excess profits are unique or at least cannot be easily duplicated. However, counterbalancing that is the assumption that supernormal or excess profits are generally due to intangible assets, which are highly mobile. Due to their high mobility, one view is that income from intangible assets should be lightly taxed. The result was a compromise: a GILTI regime in which excess profits of a CFC would be taxed effectively at 10.5 percent (through a 50 percent deduction), which was half of the US corporate tax rate of 21 percent. Once the GILTI regime was established, the concern was that US multinationals would shift or keep their intangibles offshore to utilize the GILTI regime of taxing the supernormal or excess profits (income from intangible assets) at an effective tax rate of 10.5 percent. To discourage US multinationals from doing so and to encourage domesticating intangible assets, the FDII regime was developed. US multinationals would place their earnings from directly accessing foreign markets into one of three categories: deemed tangible income return (DTIR), FDII, and foreign branch income. The first two categories matched up with NDTIR and GILTI of a CFC. As a result, FDII would be taxed effectively at 13.125 percent through a 37.5 percent deduction. Although the effective tax rate on FDII of 13.125 percent was higher than the effective tax rate of 10.5 percent on GILTI, the difference was to compensate for the fact that only 80 percent of foreign income taxes would be creditable against the US tax liability on GILTI. As a result, GILTI and FDII were designed to work together to prevent erosion of the US tax base. In March 2018, the European Union tasked the OECD’s Forum on Harmful Tax Practices (FHTP) with reviewing the FDII regime. In its January 2019 progress report on preferential regimes, the FDII regime is shown as currently under review. We expect the FHTP to conclude its review after Treasury finalizes the FDII regulations. Although no challenge has been brought yet – almost 16 months after enactment -- some countries may argue that the FDII regime is a violation of WTO rules. An excellent article addressing FDII and the WTO rules is: Grant D. Aldonas, The WTO Consistency of the Deduction for FDII, 162 Tax Notes 871 (Feb. 25, 2019) (“. . . an analysis of the eligibility requirements a taxpayer must satisfy to benefit from the section 250 deduction clarifies that the deduction for FDII is neither de jure nor de facto dependent on the export of goods, which is the limit of what the SCM (WTO’s Agreement on Subsidies and Countervailing Measures) agreement actually disciplines. For that reason, the section 250 deduction for FDII cannot be said to violate the WTO rules.”). By: Christopher Hanna, Dallas and Joshua Odintz, Washington, DC Softw are & E-Commerce Day XXII Redw ood Shores, CA ► April 30, 2019 16th Annual Global Tax Planning and Transactions Seminar New York, NY ► May 9, 2019 EMEA Tax Conference Amsterdam ► May 16, 2019 To review the complete Tax Events Calendar visit www.bakermckenzie.com/tax/event Baker McKenzie 3 Tax News and Developments April 2019 As Wayfair Anniversary Approaches, Supreme Court Ready to Hear Another Case Involving Taxation of Out-of-State Taxpayers Almost a year after the United States Supreme Court eliminated the requirement that businesses must have a physical presence within a state in order to be subject to that state’s sales and use tax (see South Dakota v. Wayfair, __U.S. __ (2018)), the Court will again review a case that directly addresses the limits of state tax jurisdiction. In January, the Court granted North Carolina’s petition for certiorari in North Carolina Department of Revenue v. The Kimberley Rice Kaestner 1992 Family Trust (Docket No. 18-457). While the Wayfair decision relied on the U.S. Constitution’s Commerce Clause and held that the Commerce Clause did not prevent a state from subjecting an out-of-state company to sales and use tax based on an economic threshold, the Kaestner case looks at the issue of taxation of out-of-state entities from the perspective of the Due Process Clause. The precise issue in Kaestner is whether the Due Process Clause of the U.S. Constitution—which is satisfied only when an out-of-state taxpayer has requisite “minimum connections” with the taxing state—prohibits states from taxing out-of-state trustees based solely on trust beneficiaries’ in-state residency. Background This case involves an irrevocable trust created for Kimberley Rice Kaestner and her children. The original trust was created under New York law by a New York resident settlor for the benefit of his descendants. The trustee was a New York resident at the time the trust was created and later moved to Connecticut (and lived in Connecticut during the tax years at issue, 2005 through 2008). The original trust was later divided into three separate trusts, one of which was the Kimberley Rice Kaestner 1992 Family Trust (the “Kaestner Trust”). The Kaestner Trust’s beneficiary, Kimberley Kaestner, moved to North Carolina subsequent to the creation of the Kaestner Trust. The Kaestner Trust’s assets were located wholly outside of North Carolina. The custodian of the assets was located in Massachusetts. All of the business of the Kaestner Trust was managed from New York. No income was distributed to Kimberley Kaestner during the tax years at issue; thus, no distributions flowed to North Carolina. Ms. Kaestner had no right to demand distributions from the Kaestner Trust and in fact was not even aware of its existence until after moving to North Carolina. Thus, Ms. Kaestner’s in-state residency was the only connection between the Kaestner Trust and North Carolina during the tax years at issue. The Assessment and Litigation The North Carolina Department of Revenue (“Department”) assessed income tax on undistributed income that had accumulated in the Kaestner Trust. In other words, the income of the trust was taxed even though it was not distributed to beneficiaries in North Carolina. The basis for the Department’s assessment was N.C. Gen. Stat. § 105-160.2, which provides that the State’s income tax on trusts is “computed on the amount of the taxable income of the estate or trust that is for Baker McKenzie 4 Tax News and Developments April 2019 the benefit of a resident of this State, or for the benefit of a nonresident to the extent that the income (i) is derived from North Carolina sources and is attributable to the ownership of any interest in real or tangible personal property in this State or (ii) is derived from a business, trade, profession, or occupation carried on in this State” (Emphasis added.) The Kaestner Trust paid $1.28 million in tax under protest. The Kaestner Trust then sought a refund claiming that the statute at issue was unconstitutional both on its face and as applied. Both the Department and the Wake County Superior Court upheld the assessment and found that the tax as applied to the Kaestner Trust was constitutional. The North Carolina Supreme Court reversed the lower court and held that, under the Due Process Clause, the trust “must have some minimum contacts with the State of North Carolina such that the trust enjoys the benefits and protections of the State.” The Kimberley Rice Kaestner 1992 Family Trust v. North Carolina Department of Revenue, 814 SE2d 43 (N.C. 2018). The Court explained that “[w]hen applied to taxation, ‘[t]he Due Process Clause requires some definite link, some minimum connection, between a state and the person, property or transaction it seeks to tax’ and that the ‘income attributed to the State for tax purposes must be rationally related to values connected with the taxing State.’” Id., citing Quill Corp. v. North Dakota, 504 U.S. 298, 307 (1992) (as discussed below, the Quill decision involved both a Due Process Clause analysis and a Commerce Clause analysis). This minimum connection is generally satisfied, as the Court explained, only where the taxpayer has an in-state presence or has otherwise “purposefully avail[ed] itself of the benefits of an economic market” in the taxing state[.]” Id., citing Quill, 504 U.S. at 307, and Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476 (1985). The Court held that the Kaestner Trust had not purposefully availed itself of the state’s economic market, noting that the beneficiaries and the trust itself exist separately for tax purposes. Thus, as applied to the Kaestner Trust, the income tax statute did not satisfy Due Process Clause requirements. In its petition for certiorari to the U.S. Supreme Court, the Department argued that without a law like North Carolina’s, “a beneficiary could enjoy the protection of a state for most of her life, then avoid taxation by relocating to a non-taxing state before taking a distribution.” In its argument against certiorari, the Kaestner Trust argued that “[n]o court has held that a beneficiary’s presence is sufficient to tax the undistributed income of a foreign trust” and that only four other states have similar statutes. The Kaestner Trust further argued that even if there is a minimum connection, the income attributed to North Carolina is not rationally related for Due Process purposes, because the Department taxed 100 percent of the trust’s income while providing no opportunity for the Kaestner Trust to create that income. The Supreme Court heard oral arguments on April 16. The arguments largely covered basic facts about how the Kaestner trust was taxed as well as how trusts were taxed generally. Interestingly, even though this is a case about Due Process, parts of the arguments implicated the Commerce Clause. There was discussion about allocation among jurisdictions, throwback rules, and credit statutes. Perhaps this is foreshadowing what is next to come. Baker McKenzie 5 Tax News and Developments April 2019 Authorities Split The Kaestner case highlights a split in state authorities regarding taxing trust income based on the trust’s in-state beneficiaries—a split which involves published decisions in nine states. Almost every state taxes trust income in some way. Four states—California, Connecticut, Illinois and Missouri—have published decisions which have allowed taxing a trust based on the presence of an in-state beneficiary. Five states—Michigan, Minnesota, New Jersey, New York, and now North Carolina—have in published decisions held the opposite. Thus, the outcome of the Kaestner case could have far-reaching consequences beyond the state of North Carolina. If the High Court holds on constitutional grounds that the presence of an in-state beneficiary does not provide the requisite Due Process minimum connections necessary to tax the trust, taxpayers in those states that do use this as a basis for taxation could have refund claims. In North Carolina alone, the Department claims to have received more than 450 contingent income tax returns from trusts awaiting the outcome of Kaestner. The FieldingCase As noted above, Minnesota is one of the states which has published authority holding that the state may not tax a trust based on the in-state residency of a beneficiary. The Minnesota Supreme Court also recently decided a case dealing with a similar issue—that is, whether the domicile of the grantor at the time of a trust’s creation alone was a sufficient basis to permit Minnesota to tax all of the income of the trust for the year at issue. See Fielding v. Commissioner of Revenue, 916 NW2d 323 (Minn. 2018). The Minnesota Supreme Court answered this question in the negative. Minnesota classifies a trust as a resident trust if the grantor was an in-state resident on the date the trust became irrevocable. William Fielding, the grantor of the four trusts at issue, was a resident of Minnesota when the trusts became irrevocable. In Fielding, unlike in Kaestner, some of the income from the four trusts was derived from sources in Minnesota. The Minnesota Court concluded that while the trust met the minimum contacts standard under the Due Process Clause, there was no “rational relationship” between “the income subject to tax and the protections and benefits conferred by the state.” Therefore, the state could not, consistent with Due Process, subject the trust’s income to tax in Minnesota. The Minnesota Commissioner of Revenue, like the North Carolina Department of Revenue, filed a petition for certiorari to the U.S. Supreme Court. See Bauerly v. Fielding (Docket No. 18-664). In the certiorari petition, the Commissioner states that the trusts “were funded by stock in a closely held family business headquartered in Minnesota; the capital gains being taxed resulted from the sale of stock in that Minnesota business; the trust documents were drafted and signed in Minnesota; the trust agreements incorporate Minnesota law; and one of the beneficiaries resides in Minnesota.” The Commissioner’s petition for certiorari is pending. It is an open question whether the Court will decide to grant review, as it did in Kaestner, and, if it does, Baker McKenzie 6 Tax News and Developments April 2019 whether it will hear the cases as companion cases, hold the Fielding case in abeyance pending the Kaestner decision, or take some other action. Far-Reaching Impacts The Court’s decision could have meaningful impact outside of the trust context, extending to all of state and local tax. One issue that many practitioners are considering is the extent to which the Kaestner decision will be guided by, and ultimately interplay with, the Court’s 2018 Wayfair decision. Again, the issue in Wayfair was whether the Commerce Clause prong of the Court’s holding in Quill v. North Dakota—i.e., that a non-domiciliary company must have physical presence in the taxing state in order to be subject to sales and use tax obligations—should be overturned. The Commerce Clause restrictions on multistate taxation are distinct from the restrictions imposed by the Due Process Clause. While the Commerce Clause requires (in addition to other requirements) that a taxpayer have a substantial nexus with the taxing state—a requirement that the Court found was satisfied through substantial economic contacts in Wayfair, thereby overturning Quill on this issue—the Due Process Clause requires that a taxpayer have minimum contacts with the taxing state and purposefully avail itself of that state’s marketplace. Wayfair did not disturb Quill’s holding that the Due Process Clause must be satisfied in order to subject an outof-state taxpayer to in-state taxation. Nevertheless, the Department heavily referenced Wayfair in its petition for certiorari in the Kaestner case. The Department argued that “Wayfair is a model for modernizing this Court’s trust-taxation jurisprudence.” The Department further argued that the notion that a trust’s beneficiaries’ contacts with a taxing state are not contacts of the trust itself “is an outdated notion, reminiscent of the physical-presence rule that was retired in Wayfair.” In addition, the Department wrote that, “[l]ike Wayfair, this case presents an opportunity for the Court to eliminate a ‘judicially created tax shelter.’” The Department also argued that physical presence is not necessary for beneficiaries and trusts because with advances in technology, beneficiaries can easily use an out-of-state trust—an argument that was successful when asserted by South Dakota as to the ability of remote sellers to more easily comply with sales tax laws in states where they did not have a physical presence. Interestingly, the state of South Dakota, the forerunner in imposing sales tax on remote sellers and the undisputed winner in the Wayfair case, filed an amicus curiae brief in the Kaestner case—in support of the Kaestner Trust. South Dakota’s amicus brief mentioned the Department’s attempt at using Wayfair to support its position, but South Dakota said the Wayfair decision did not apply in the instant case. The state remarks that “North Carolina now invokes Wayfair to argue for abrogation of certain ‘formalisms’ which prevent states from taxing accumulated, undistributed gains held in out-of-state trusts. . . . North Carolina proposes to dispense with these ‘formalisms’ so that states may, in effect, pierce the fiduciary veil to directly tax in-state beneficiaries for undistributed gains realized by an out-of-state trust over which beneficiaries exercise no control.” Moreover, while the decision was supported by the overall “modernization” of the retail industry from the time of Quill (1992) until the time of Wayfair (2018), South Dakota notes that “[t]he trust industry, unlike the retail industry sector, has not experienced systemic structural changes warranting such radical reformulation of Baker McKenzie 7 Tax News and Developments April 2019 due process principles.” Moreover, South Dakota argues that North Carolina is asking the court to establish a smaller minimum contacts standard than South Dakota asked for in Wayfair. Unlike South Dakota, Minnesota and 19 other states filed an amicus brief in support of the Department. Takeaway The Kaestner case provides ripe opportunity for the Court to provide additional needed guidance on the limitations governing state taxation of out-of-state persons and entities. While the Wayfair decision held that the Commerce Clause does not prevent a state from taxing an out-of-state entity that has substantial economic contacts with the state, the decision does not define what constitutes a necessary minimum connection with the state for Due Process Clause purposes. The Court may have the opportunity to answer that question in Kaestner. Post-Wayfair, the Due Process Clause and the “purposeful availment” standard set forth by the Supreme Court decades ago is in many instances the strongest argument that taxpayers have in preventing their income from being taxed by states where they do not have a physical presence. Thus, what the Court has to say about the Due Process Clause carries the potential for significant tax implications well beyond the litigants and outside the trust tax context. By: Kavya Rajasekar, New York Canada’s Latest Federal Budget Proposes a Number of International Tax Measures On March 19, 2019 (“Budget Day”), the Canadian Minister of Finance tabled the Liberal government’s final budget before the next federal election. Budget 2019 contains a number of proposed changes to the Income Tax Act (Canada) (the “ITA”). This summary focuses on the key international tax measures proposed in Budget 2019, as well as the proposed change to the stock option rules. Transfer Pricing Budget 2019 proposes to amend Part XVI.1 of ITA to provide that where both the cross-border transfer pricing rules in Part XVI.1 of the ITA and other provisions of the ITA apply to the same transaction, the transfer pricing rules will take precedence. The proposed amendment will apply to taxation years that begin on or after Budget Day. The Technical Notes released by the Canadian Department of Finance with Budget 2019 indicate that the ordering of the rules under the ITA is relevant in determining the quantum of the adjustments that are subject to transfer-pricing penalties. However, it is unclear the extent to which this ordering rule will impact other provisions of the ITA in the cross-border context. For example, the ITA contains so-called thin capitalization rules in Part I of the ITA which deny an interest expense deduction to a Canadian company on related party cross-border debt where the debt to equity ratio exceeds 1.5 to 1. As a result of the new ordering rule, the Canada Revenue Agency (the “CRA”) may be permitted to reassess a Canadian subsidiary that is within the 1.5 to 1 ratio to deny an interest expense Baker McKenzie 8 Tax News and Developments April 2019 on loans from foreign parent on the basis that an arm’s length lender would have required a lower debt-to-equity ratio. Part I also contains rules that generally impute interest at a prescribed rate to a Canadian company that loans funds to a non-resident at no interest or less than a reasonable interest, where the loan is outstanding for more than one year. The prescribed rate is currently 2%. Under the new ordering rules, the CRA may be entitled to impute an amount in excess of the prescribed rate if under arm’s length transfer pricing rules, the Canadian company should have charged an amount in excess of the prescribed rate. This measure will apply to taxation years that begin on or after Budget Day. The ITA provides that an extended three-year reassessment period applies to a transaction involving a taxpayer and a non-resident with whom the taxpayer does not deal at arm’s length. However, the expanded definition of “transaction” used in the transfer pricing rules does not apply for the purposes of the rule establishing the extended reassessment period. Budget 2019 proposes to amend the ITA to provide that the definition “transaction” used in the transfer pricing rules also be used for the purposes of the extended reassessment period relating to a transaction involving a taxpayer and a non-resident with whom the taxpayer does deal at arm’s length. The proposed amendment will apply to taxation years for which the normal reassessment period (generally three or four years) ends on after Budget Day. Foreign Affiliate Dumping (“FAD”) The FAD rules apply generally where a corporation resident in Canada (“CRIC”) that is controlled by a non-resident corporation (the “Parent”) (or by a related group of non-resident corporations) makes an equity or debt investment in a foreign affiliate of the CRIC. In general terms, where the rules apply the CRIC is deemed to have paid a dividend (subject to Canadian withholding tax) and the paid up capital of the CRIC may be reduced as a result of the investment. The ITA will be expanded to cover investments by a non-resident individual, a non-resident trust or a group of persons that do not deal with each other at arm’s length, comprising any combination of non-resident corporations, non-resident individuals and non-resident trusts. To ensure that a non-resident trust will be considered to be related to another non-resident person in circumstances similar to where a non-resident corporation would be related, the proposals include an extended meaning of “related” that will apply for the purpose of determining whether a non-resident trust does not deal at arm’s length with another nonresident person. The proposed amendments will apply to transactions and events that occur on or after Budget Day. Cross-Border Share Lending Arrangements In a typical securities lending transaction, the “borrower” of the shares is obligated to make payments to the “lender” of the shares as compensation for any dividends paid on the share until such time as the borrower returns the share or an identical share to the lender. For withholding tax purposes, where the Canadian borrower has fully collateralized the loan i.e. provided cash or qualifying government debt in an amount equal to at least 95 per cent of the value of the borrowed shares, the compensation payment is deemed to be a dividend on a share for withholding tax purposes. Baker McKenzie 9 Tax News and Developments April 2019 Where the borrowing is not fully collateralized as described above, the compensation payment is treated as interest for withholding tax purposes. Interest other than “participating debt interest” paid by a Canadian resident to an arm’s length non-resident is now generally exempt from withholding tax under the ITA. Budget 2019 proposes to eliminate the ability to avoid withholding tax in respect of shares of a Canadian issuer. Pursuant to the proposals, dividend compensation payments made to a non-resident securities lender under a securities lending arrangement in respect of Canadian shares will be deemed to be a dividend for Canadian withholding tax purposes regardless of whether the borrowing is collateralized. Budget 2019 Budget also proposes changes to ensure that withholding tax on dividend compensation payments on Canadian shares made to a non-resident securities lender cannot be avoided by causing the transaction to not qualify as a “securities lending arrangement” as defined in the ITA. These changes will apply to compensation payments that are made on or after Budget Day. Where, however, a securities loan was in place before Budget Day, compensation payments made prior to October 2019 will generally be grandfathered. Lastly, where the borrowed share is a foreign share rather than a Canadian share and the transaction is collateralized as described above, under current rules dividend compensation payments are deemed to be Canadian source dividends subject to withholding tax. Budget 2019 Budget proposes to amend the ITA so that a dividend compensation payment relating to shares of a nonresident corporation will not be subject to dividend withholding tax where the securities lending arrangement is “fully collateralized” and the lent security is a foreign share. This change will apply to dividend compensation payments made on or after Budget Day. Stock Options Provided that certain conditions are met, under current stock option rules, employees are entitled to exclude 50% of the difference between the exercise price and the grant price in computing their employment income under the ITA. Budget 2019 proposes a cap which would significantly limit this deduction. The proposal would cap the 50% deduction for stock options at CAD $200,000 annually, calculated based on the fair market value of the underlying shares at grant. The proposed cap would not apply to stock options granted by “start-ups and rapidly growing Canadian businesses.” It is not yet clear how these businesses will be defined. A corporate tax deduction may be available for stock options granted in excess of the annual cap. The cap would only apply on a prospective basis to stock options granted after the announcement of any legislative proposals, which are to be released before summer 2019. By: Brian Segal, Toronto Baker McKenzie North America Tax Chicago +1 312 861 8000 Dallas +1 214 978 3000 Houston +1 713 427 5000 Los Angeles +1 310 201 4728 Miami +1 305 789 8900 New York +1 212 626 4100 Palo Alto +1 650 856 2400 San Francisco +1 415 576 3000 Toronto +1 416 863 1221 Washington, DC +1 202 452 7000 Baker McKenzie 10 Tax News and Developments April 2019 Regulations Address FATCA Verification and Certification Requirements In late March 2019, the IRS issued regulations finalizing proposed regulations (REG-103477-14) relating to FATCA verification and certification requirements for sponsoring entities, trustees of trustee documented trusts (“TDTs”) and compliance financial institutions. The final regulations confirm that March 31, 2019, was the deadline for sponsoring entities to ensure that written sponsorship agreements are in place and for certain sponsored entities to submit compliance certifications. The final regulations also expand the definition of responsible officer and provide limitations for sponsored entities of a terminated sponsoring entity. The IRS will continue to refine and update FATCA compliance requirements for FFIs, as such, FATCA responsible officers should carefully monitor future developments to ensure timely ongoing compliance with all requirements. For a detailed discussion, please see the Baker McKenzie Client Alert, “Regulations Address FATCA Verification and Certification Requirements," distributed on April 19, 2019, which provides a summary of the modifications set forth in the final regulations. By: Bruna Barbosa, Miami Tax News and Developments isa periodic publication of Baker McKenzie'sNorth America Tax Practice Group. The articles and comments contained herein do not constitute legal advice or formal opinion, and should not be regarded as a substitute for detailed advice in individual cases. Past performance is not an indication of future results. Tax News and Developments is edited by Senior Editors, James H. Barrett (Miami) and David G. Glickman (Dallas), and an editorial committee consisting of Nicole Ford (New York), Glenn G. Fox (New York), Gwen Hulsey (Houston), Sam Kamyans(Washington, DC), Paula Levy (Palo Alto), Alex Pankratz (Toronto), Julia Skubis Weber (Chicago), and Robert S. Walton (Chicago). For further information regarding the North American Tax Practice Group, any of the items or Upcoming Events appearing in this Newsletter, or to receive Tax News and Developments directly, please contact Marie Caylor at 312-861-8029 or email@example.com. Your Trusted Tax Counsel ® www.bakermckenzie.com/tax www.bakermckenzie.com Baker & McKenzie 300 East Randolph Drive Chicago, Illinois 60601, USA Tel: +1 312 861 8000 Fax: +1 312 861 2899 ©2019 Baker & McKenzie. All rights reserved. Baker & McKenzie International is a Swiss Verein with member law firms around the world. In accordance with the common terminology used in professional service organizations, reference to a "partner" means a person who is a partner, or equivalent, in such a law firm. Similarly, reference to an "office" means an office of any such law firm. This may qualify as "Attorney Advertising" requiring notice in some jurisdictions. Prior results do not guarantee a similar o utcome.