Page 13 - Additional Withholding Requirements
SPECTRA ENERGY PARTNERS, LP filed this Form 8-K on 2/21/2018
Generally, we expect to elect to have our
general partner, unitholders and former unitholders take any such audit adjustment into account in accordance with their interests
in us during the taxable year under audit, but there can be no assurance that such election will be effective in all circumstances.
If we are unable or if it is not economical to have our general partner, unitholders and former unitholders take such audit adjustment
into account in accordance with their interests in us during the taxable year under audit, our then current unitholders may bear
some or all of the tax liability resulting from such audit adjustment, even if such unitholders did not own our units during the
taxable year under audit. If, as a result of any such audit adjustment, we are required to make payments of taxes, penalties or
interest, our cash available for distribution to our unitholders might be substantially reduced and our current and former unitholders
may be required to indemnify us for any taxes (including any applicable penalties and interest) resulting from such audit adjustments
that were paid on such unitholders’ behalf. These rules are not applicable for taxable years beginning on or prior to December
31, 2017. Congress has proposed changes to the Bipartisan Budget Act, and we anticipate that amendments may be made. Accordingly,
the manner in which these rules may apply to us in the future is uncertain.
Additionally, pursuant to the Bipartisan
Budget Act of 2015, the Code will no longer require that we designate a Tax Matters Partner. Instead, for taxable years beginning
after December 31, 2017, we will be required to designate a partner, or other person, with a substantial presence in the United
States as the partnership representative (“Partnership Representative”). The Partnership Representative will have
the sole authority to act on our behalf for purposes of, among other things, federal income tax audits and judicial review of administrative
adjustments by the IRS. If we do not make such a designation, the IRS can select any person as the Partnership Representative.
We currently anticipate that we will designate our general partner as the Partnership Representative. Further, any actions taken
by us or by the Partnership Representative on our behalf with respect to, among other things, federal income tax audits and judicial
review of administrative adjustments by the IRS, will be binding on us and all of our unitholders.
Additional Withholding Requirements
Withholding taxes may apply to certain
types of payments made to “foreign financial institutions” (as specially defined in the Code) and certain other non-U.S.
entities. Specifically, a 30% withholding tax may be imposed on interest, dividends and other fixed or determinable annual or periodic
gains, profits and income from sources within the United States (“FDAP Income”), or gross proceeds from the sale or
other disposition of any property of a type which can produce interest or dividends from sources within the United States (“Gross
Proceeds”) paid to a foreign financial institution or to a “non-financial foreign entity” (as specially defined
in the Code), unless (i) the foreign financial institution undertakes certain diligence and reporting, (ii) the non-financial foreign
entity either certifies it does not have any substantial U.S. owners or furnishes identifying information regarding each substantial
U.S. owner or (iii) the foreign financial institution or non-financial foreign entity otherwise qualifies for an exemption from
these rules. If the payee is a foreign financial institution and is subject to the diligence and reporting requirements in clause
(i) above, it must enter into an agreement with the U.S. Department of the Treasury requiring, among other things, that it undertake
to identify accounts held by certain U.S. persons or U.S.-owned foreign entities, annually report certain information about such
accounts, and withhold 30% on payments to noncompliant foreign financial institutions and certain other account holders. Foreign
financial institutions located in jurisdictions that have an intergovernmental agreement with the United States governing these
requirements may be subject to different rules.
Generally these rules apply to current
payments of FDAP Income and will apply to payments of relevant Gross Proceeds made on or after January 1, 2019. Thus, to the
extent we have FDAP Income or we have Gross Proceeds on or after January 1, 2019 that are not treated as effectively connected
with a U.S. trade or business (please read “—Tax-Exempt Organizations and Other Investors”), a unitholder that
is a foreign financial institution or certain other non-U.S. entity, or a person that holds its units through such foreign entities,
may be subject to withholding on distributions they receive from us, or its distributive share of our income, pursuant to the rules
Each prospective unitholder should consult
its own tax advisors regarding the potential application of these withholding provisions to its investment in our units.