Treasury, IRS to Propose Sourcing Rules for Securities-Loan Fees

The Treasury Department and the IRS said they intend to propose rules clarifying where “borrow fees” for securities-lending transactions and sale-repurchase transactions should be sourced.

The forthcoming proposed regulations will specify that the payment of such fees will be sourced based on the residence of the recipient, Treasury and the IRS said Thursday (Notice 2025-63). The tax code and existing regulations don’t directly specify how the source of those payments should be determined, the agencies said.

• Securities are often loaned to facilitate short-selling and other market activity. The forthcoming proposed rules on sourcing would apply to borrow fees ...