On March 10, Nareit Senior Executive Vice President Tony Edwards and a group of other real estate representatives met with senior Treasury Department tax officials to explain why IRS Notice 2007-55 should be withdrawn. Reversing the consensus of the tax community before its issuance, the notice concluded that FIRPTA should apply to the liquidation of a domestically controlled REIT and indicated that regulations would be forthcoming to that effect (although none have been issued to date).
The delegation indicated to the Treasury Department that the notice is creating unnecessary friction and in some cases is preventing foreign capital from being invested in U.S. real estate and therefore should be withdrawn. As reported in a March 4 REIT.com blog post, Treasury Secretary Steven Mnuchin told the House Ways and Means Committee that “it makes no sense that we discriminate against foreign investors,” and that the issue of withdrawing the notice is “at the top of my list.”
(Contact: Tony Edwards at tedwards@nareit.com)