The IRS and the Treasury Department have amended their regulations regarding disclosure of certain confidential transactions to exclude many traditional corporate transactions that had inadvertently come within the scope of the prior regulations. The amended regulations, which became effective December 29, 2003, now require disclosure only if an advisor has been paid a fee of $250,000 for a corporate transaction ($50,000 in the case of individuals) and the advisor has required a confidentiality agreement that protects the confidentiality of the advisor's tax strategies. Typical agreements of confidentiality imposed by the parties to the transaction will no longer cause the transaction to fall within the regulations.
Since adoption of the prior regulations in February 2003, which were intended to enable the IRS to uncover abusive tax shelters, a market practice had developed in private equity, M&A and other corporate transactions, of including a specific exemption in confidentiality agreements for disclosure of the tax structure and treatment of the transaction. The amended regulations eliminate the need for that exemption.
Goodwin Procter LLP is one of the nation's leading law firms, with a team of 650 attorneys and offices in Boston, New York and Washington, D.C. The firm combines in-depth legal knowledge with practical business experience to deliver innovative solutions to complex legal problems. We provide litigation, corporate law and real estate services to clients ranging from start-up companies to Fortune 500 multinationals, with a focus on matters involving private equity, technology companies, real estate capital markets, financial services, intellectual property and products liability.
This article, which may be considered advertising under the ethical rules of certain jurisdictions, is provided with the understanding that it does not constitute the rendering of legal advice or other professional advice by Goodwin Procter LLP or its attorneys. (c) 2003 Goodwin Procter LLP. All rights reserved.