Comments on Proposed PTEP Regulations

March 3, 2025

Shelley de Alth Leonard
Acting Assistant Secretary (Tax Policy)
U.S. Department of Treasury
1500 Pennsylvania Avenue N.W.
Washington, D.C. 20220

William M. Paul
Acting Chief Counsel
Internal Revenue Service
1111 Constitution Avenue N.W.
Washington, D.C. 20224

Re: Previously Taxed Earnings and Profits and Related Basis Adjustments (REG-105479-18)

Dear Ms. Leonard and Mr. Paul:

The U.S. Chamber of Commerce (“Chamber”) welcomes the opportunity to comment on the long-awaited proposed regulations under sections 959 and 961 of the Internal Revenue Code regarding previously taxed earnings and profits (“PTEP”) of foreign corporations and related basis adjustments.^[1]

In December 2018, the Department of the Treasury (“Treasury”) and Internal Revenue Service (“IRS”) released Notice 2019–01,^[2]

[2] 2019-02 I.R.B. 275.

which announced an intent to withdraw proposed regulations issued in 2006 and issue a new notice of proposed rulemaking under sections 959 and 961 to address certain issues arising from the Tax Cuts and Jobs Act (“TCJA”). As explained in that notice, changes made by the TCJA had a significant impact on the role of PTEP and how it functions within the U.S. tax system.

The proposed regulations would provide rules addressing core aspects of the PTEP system, including rules to address longstanding issues under sections 959 and 961, account for new provisions and amendments under the TCJA, and implement IRS notices from 1988 and 2019. As set forth in the enclosed comments, however, the proposed regulations are lacking in several important respects and could benefit from revisions prior to being finalized. In general, taxpayers are unable to rely on the proposed regulations before the taxable year final regulations are published in the Federal Register. Additionally, the proposed regulations would add inordinate complexity to controlled foreign corporation (“CFC”) share basis tracking by adopting a share-by-share approach that, if finalized, could result in double taxation. Furthermore, the proposed regulations do not contain any de minimis thresholds for tracking PTEP and basis, despite the obvious impracticability of tracking all U.S. persons’ PTEP and basis—regardless of whether any such person is a United States shareholder. The proposed regulations also presume that partnerships will be able to obtain the partner-level information needed to comply therewith. These and other issues are discussed in greater detail in the enclosed comments. Please note, however, that the enclosed comments represent only a subset of the issues raised by our member companies.

The Chamber appreciates the opportunity to comment on the proposed regulations. We urge Treasury and the IRS to engage closely with the business community while reviewing our and other stakeholders’ comments. As always, we would welcome the opportunity to discuss our comments with you or your colleagues in further detail and provide whatever additional information you may require. Thank you for your time and attention.

Sincerely,

Watson M. McLeish
Senior Vice President, Tax Policy
U.S. Chamber of Commerce

Enclosure

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^[1]

Previously Taxed Earnings and Profits and Related Basis Adjustments, 89 Fed. Reg. 95362 (proposed Dec. 2, 2024).

^[2]

2019-02 I.R.B. 275.