SECTION 2. BACKGROUND

.01 Under section 6103(e)(1) through (6), a person with a material interest in a tax return may inspect that return. Under section 6103(e)(7), a person who may inspect a return under section 6103(e)(1) through (6) may inspect return information pertaining to that return if the Secretary determines that disclosure of the return information would not seriously impair Federal tax administration. Under section 6103(p)(2), the Secretary is authorized to furnish copies to any person authorized to inspect returns and return information and to charge a reasonable fee for the copies. See also section 601.702(d)(1) of the Statement of Procedural Rules.

.02 Section 6104(a), (b), and (d) requires the IRS to make available for public inspection certain returns and return information including applications, notices, and reports relating to certain tax exempt organizations and pension plans.

.03 Section 301.6104(a)–6 of the Procedure and Administration Regulations and

this provision and which includes an exchange of information program. ¹ Section 1(h)(11)(C)(i). Subject to the same exceptions, a foreign corporation that does not satisfy either of these two tests is treated as a qualified foreign corporation with respect to any dividend paid by such corporation if the stock with respect to which such dividend is paid is readily tradable on an established securities market in the United States. Section 1(h)(11)(C)(ii). A qualified foreign corporation does not include any foreign corporation which for the taxable year of the corporation in which the dividend was paid, or the preceding taxable year, is a foreign personal holding company (as defined in section 552), a foreign investment company (as defined in section 1246(b)), or a passive foreign investment company (as defined in section 1297). ² Section 1(h)(11)(C)(iii).

For purposes of applying section 1(h)(11)(C)(ii) to taxable years beginning on or after January 1, 2003, common or ordinary stock, or an American depositary receipt in respect of such stock, is considered readily tradable on an established securities market in the United States if it is listed on a national securities exchange that is registered under section 6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f) or on the Nasdaq Stock Market. As stated in the SEC’s Annual Report for 2002, registered national exchanges as of September 30, 2002, include the American Stock Exchange, the Boston Stock Exchange, the Cincinnati Stock Exchange, the Chicago Stock Exchange, the NYSE, the Philadelphia Stock Exchange, and the Pacific Exchange, Inc.

Treasury and the IRS are continuing to consider, for future years, the treatment of dividends with respect to stock listed only in a manner that does not meet this definition, such as on the OTC Bulletin Board or on the electronic pink sheets. In particular, Treasury and the IRS are considering whether or to what extent treatment of stock that is listed only in such manner as "readily tradable on an established securities market in the United States" should

be conditioned on the satisfaction of parameters regarding minimum trading volume, minimum number of market makers, maintenance and publication of historical trade or quotation data, issuer reporting requirements under SEC or exchange rules, or issuer disclosure or determinations regarding passive foreign investment company, foreign investment company, or foreign personal holding company status. Treasury and the IRS request comments on the treatment of such stock and on the use of these parameters or any other factors that commentators believe should be considered.

EFFECTIVE DATE

This notice is effective for taxable years beginning on or after January 1, 2003.

COMMENTS

Treasury and the IRS invite interested persons to comment on the issues raised in this notice with regard to future years. Written comments may be submitted to CC:ITA:RU (Notice 2003–71), room 5226, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand delivered Monday through Friday between the hours of 8 am and 5 pm to: CC:ITA:RU (Notice 2003–71), Courier’s desk, Internal Revenue Service, 1111 Constitution Avenue, NW, Washington, DC 20044. Alternatively, taxpayers may submit comments electronically via the following e-mail address: Notice. Comments@irscounsel.treas.gov. Please include “Notice 2003–71” in the subject line of any electronic communications.

CONTACT INFORMATION

The principal author of this notice is Karen Rennie-Quarrie of the Office of Associate Chief Counsel (International). Ms. Rennie-Quarrie may be contacted at (202) 622–3880 (not a toll-free number).

1 Notice 2003–69 contains the current list of the U.S. tax treaties that meet these requirements.

2 A dividend from a qualified foreign corporation also is subject to the other limitations in section 1(h)(11). For example, a shareholder receiving a dividend from a qualified foreign corporation must satisfy the holding period requirements of section 1(h)(11)(B)(iii).

2003-43 I.R.B. 923 October 27, 2003

section 601.702(d)(1), (3), (4), and (5) of the Statement of Procedural Rules provide procedures to inspect or obtain copies of certain exempt organization or pension plan returns and return information that are publicly available and authority for any fees for copies.