New PFIC Reporting Requirements for Investors in CLO Subordinated Notes, Preferred Shares and Income Notes

U.S. taxpayers that own subordinated notes or preferred shares of a CLO issuer, or income notes reflecting an ownership interest in CLO subordinated notes, currently have an obligation to file a U.S. tax form (Form 8621) with their U.S. tax returns if the relevant issuer is treated as a passive foreign investment company (“PFIC”), which is usually the case, and certain other conditions are met. As a result of temporary regulations published on December 31, 2013, failure to file a Form 8621 generally will suspend the statute of limitations for assessment on the related income tax return indefinitely. These rules took effect upon issuance, meaning that they apply to tax returns for the 2013 calendar year, which are required to be filed in 2014, and all future years.