Can I apply the provisions of Notice 97-66 to a chain of dividend equivalent payments?
No. The new provision overrides Notice 97-66. That notice was intended to eliminate overwithholding where there were multiple securities lending or repo transactions of the same security. Part of the reason the new provision was enacted was the concern that some taxpayers took the position that withholding could be reduced even if withholding on a previous payment in the chain could not be established. It is expected that the IRS will issue regulations to prevent duplicative withholding when there is a chain of dividend equivalent payments, but those regulations generally will require a taxpayer to establish that the tax has been paid on another dividend equivalent in the chain. What do I need to do now? Query your systems or manually determine which contracts meet the specified NPC criteria. You should also identify equity securities loans and equity repos to determine if they extend beyond the September 14, 2010 date. Once you have identified the affected contracts, you should consul