On 10 December 2025, the IRS and Treasury announced forthcoming proposed regulations to address the sourcing of borrow fees in securities lending and sale-repurchase transactions. The proposed rules will source borrow fees to the residence of the recipient, generally exempting non-US securities lenders from US withholding tax.
The guidance applies to transactions documented under standard industry agreements and defines borrow fees broadly, including negative rebates, while excluding bespoke arrangements.
Taxpayers may rely on the Notice immediately, with the regulations applying prospectively to taxable years ending after publication in the Federal Register

The IRS recently announced changes to its Form 14457, “Voluntary Disclosure Practice Preclearance and Application,” which allows taxpayers to apply to the IRS in an attempt to limit criminal exposure by disclosing past noncompliance and paying past taxes, interest and penalties. The new form includes several revisions that demonstrate a stricter approach towards taxpayers wanting to voluntarily disclose past tax-related misconduct, including: an admission of willfulness, a more detailed narrative requirement, a shorter time to prepare documents, and mandatory full payment. Taxpayers should consult with counsel to examine any increased risks associated with filing the revised form.