Bloomberg, IRS Urges Upholding Foreign Investment Firm’s $97 Million Bill:

The US Tax Court properly held that Cayman Islands partnership YA Global Investments LP failed to withhold taxes on income from an affiliated US financial adviser and is on the hook for $96.8 million in deficiencies, the IRS told a federal appeals court.

YA Global’s income was “effectively connected” with its business in the US conducted through New Jersey investment management firm Yorkville Advisors, and is therefore liable for taxes it should have withheld on that business from 2006 through 2009, the IRS said in a brief filed with the US Court of Appeals for the Third Circuit.

The Jan. 12 brief cited IRC Section 1446, which requires foreign partnerships to pay withholding tax on “effectively connected taxable income,” where the partnership’s business activities are functionally conducted in the US.

Ya Global appealed the Tax Court’s decision in September 2025, claiming the Tax Court didn’t “determine that YA Global was in the business of lending. Or dealing. Or underwriting. Or acting as an investment bank.” The evidence shows YA Global didn’t generate profits from the purported businesses, the company told the Third Circuit.

The IRS also said the Tax Court correctly found YA Global’s taxable income for 2006-2009 was subject to adjustment under the mark-to-market accounting rules because it was a “dealer in securities” under IRC Section 475(c)(1). No exceptions in applying the market-to-market rules apply because YA Global didn’t properly identify its securities, the government said.

DLA Piper LLP (US) and Morgan Lewis & Bockius LLP represent YA Global.

The case is YA Glob. Invs. LP v. Commissioner, 3d Cir., No. 25-01766, appellee brief filed 1/12/26.