On March 18, 2010, President Obama signed into law the Hiring Incentives to Restore Employment Act (the “Act”). The Act incorporates the Foreign Account Tax Compliance Act including provisions which: (i) introduce a new 30% withholding tax on certain payments made to foreign entities that fail to comply with specified reporting or certification requirements, (ii) end the practice whereby U.S. issuers sell bearer bonds to foreign investors by repealing the U.S. bearer bond exception, and (iii) impose a withholding tax on “dividend equivalents” paid under equity swaps. This alert addresses these provisions of the Act and certain other provisions aimed at preventing offshore tax avoidance by U.S. persons. The new withholding tax applies to relevant payments made after December 31, 2012. Importantly, debt obligations outstanding on March 18, 2012 are “grandfathered” from the new withholding tax and from the repeal of the U.S. bearer bond exception.