Companies that cut their US tax bills by moving offshore soon will have to tell shareholders they may face capital gains taxes from the transaction, the US Treasury Department's top tax official said yesterday.

Pamela Olson, Treasury assistant secretary for tax policy, said her agency plans to issue regulations "that require reporting of gross proceeds of an inversion transaction to shareholders." The regulations could come as early as this week, she later told reporters.

Her comments came during a panel discussion before a meeting of the American Institute of Certified Public Accountants, Dow Jones Newswires reported.

The impact of the new rules may be muted, since some companies haven't been reporting large capital gains due to the market's decline.

The broader issue involves companies such as Tyco International Ltd. (TYC) and Cooper Industries Ltd. (CBE) that have shifted their headquarters to Bermuda and elsewhere to slash their US income taxes. These transactions, known as corporate inversions, can save the companies millions of dollars in taxes.

Willard Taylor, a partner at Sullivan & Cromwell in New York, told Dow Jones that he doesn't think the new reporting rules are as meaningful as proposed legislation in Congress that targets the basic economics of the deals.

"I don't think it is a particularly significant event in the life of an inversion transaction," he said. The Treasury Department said in a May report many of these transactions "are taxable events at the shareholder level" and as a result, "the company's US shareholders (are) required to recognise gain and pay tax." However, there isn't a requirement the companies report the gain to the shareholders on an IRS Form 1099, the paperwork usually used to denote capital gains.

Requiring such paperwork "will improve compliance and put a chill on others," she said.