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Until recently, foreign persons could enter into transactions that were economically similar to investment in U.S. stocks or securities but avoid the U.S. withholding tax that would have been owed on any payment of dividends or interest had such persons actually acquired U.S. stock or securities. Section 871(m) removed this loophole by requiring withholding tax to be paid on any notional principal contract (NPC) or similar transaction. After receiving comments on a proposed seven-factor test to determine whether a contract or transaction fell within the ambit of Section 871(m), the IRS and Treasury issued new proposed regulations that instead adopt an objective "delta" test. Under these proposed regulations, if the delta test is satisfied, then the specified NPC or transaction falls within Section 871(m)'s ambit and is subject to withholding. This article describes the new proposed regulations and provides examples of how the test would be applied