US: No more bearer bonds?

Author: | Published: 23 Nov 2009

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The Foreign Account Tax Compliance Act of 2009 (the Bill) was introduced in the US Congress at the end of October. If enacted in its current form, the Bill would effectively end the practice whereby US issuers sell so-called bearer bonds to foreign investors.

In 1982, as part of a tax compliance initiative, the Congress passed the Tax Equity and Fiscal Responsibility Act (Tefra) which restricts the issuance of debt instruments in bearer form. Under Tefra, issuers of debt instruments in bearer form are (i) denied deductions of federal...