Search
 

IRS Regs Threaten Cash Management

Proposed rules designed to curb inversions could constrain cash pooling and other treasury tools.

By Susan Kelly | Updated on June 15, 2016
The Obama administration’s attempt to limit corporate inversions could end up making life harder for corporate treasurers.

In April, the U.S. Treasury rolled out proposed Internal Revenue Service regulations designed to curb inversions. The regulations’ unintended consequence would be to make it more difficult for companies to use cross-border cash pooling and other cash management and risk management tools.

In a corporate inversion, a company moves its legal domicile to a foreign country that imposes lower corporate taxes. Then it transfers earnings to the new parent company by issuing debt to the parent. The U.S. subsidiary pays interest on that debt and deducts that interest from its U.S. taxes, so the organization effectively pays tax on its earnings only in the low-tax country of the parent company.

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.

Already have an account?

NOT FOR REPRINT

© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Recommended Stories

Treasury & Risk

Join Treasury & Risk

Don’t miss crucial treasury and finance news along with in-depth analysis and insights you need to make informed treasury decisions. Join Treasury & Risk now!

  • Free unlimited access to Treasury & Risk including case studies with corporate innovators, informative newsletters, educational webcasts, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM publications including PropertyCasualty360.com and Law.com.

Already have an account? Sign In Now
Join Treasury & Risk

Copyright © 2025 ALM Global, LLC. All Rights Reserved.