On April 2, 2018, the IRS issued Notice 2018-29, which provides interim guidance on new withholding obligations on persons purchasing partnership interests from non-U.S. persons if the partnership holds assets that are used in a U.S. trade or business. The notice reflects that the IRS has decided to leave in place new withholding tax rules for transfers of interests in private partnerships, which require that the withholding agent report and pay any withholding tax within 20 days of transfer. It also reflects that de minimis exemptions are available if the seller certifies to the buyer that (a) less than 25% of the seller's allocable share of partnership income was connected with a U.S. trade or business in the preceding three taxable years or (b) the partnership would recognize less than 25% of the gain in a hypothetical sale transaction of all of its assets connected with a U.S. trade or business. The IRS notice provides interim clarification on withholding obligations as the IRS prepares to issue comprehensive regulations. For more information, see https://www.irs.gov/pub/irs-drop/n-18-29.pdf.
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