Foreign taxpayers have long been a thorn in the side of Congress. Not only is the proper incidence of tax a far greater issue than in the domestic context, so is whether that tax will ever be collected. The average foreign taxpayer, with little the IRS can readily attach, is not overly concerned with whether the United States tax bill has been paid. Consequently, the Internal Revenue Code of 1986 (the Code) has a number of provisions designed to overcome the reluctance of foreign taxpayers to pay United States tax.
Walter D. Schwidetzky,
Foreign Taxation: The Section 367(e) Regulations -- No Place to Hide,
Nw. J. Int'l L. & Bus.