by Philippe Benedict, Kurt F. Rosell, Jesse R. Rubin, Daniel S. Shapiro, Shlomo C. Twerski and Alan S. Waldenberg
Originally published in: SRZ Client ALERT , November 2002
The Treasury Department recently released new Temporary Regulations imposing information reporting obligations and investor list maintenance requirements with respect to potentially abusive tax shelter transactions. The new regulations, generally effective for transactions on or after January 1, 2003, appear to apply to a broad range of investments, such as those undertaken by investment partnerships (including hedge funds, private equity funds and certain funds registered under the Investment Company Act of 1940), which are not commonly viewed as tax shelter transactions. Funds and their investors will be required to disclose to the Internal Revenue Service (and to its Office of Tax Shelter Analysis) their participation in these transactions. Fund managers, and other "material advisors" to the funds, will also be obligated to maintain information regarding investors in the funds for inspection, upon request, by the Internal Revenue Service.