The Internal Revenue Service's long-awaited changes to regulations governing how U.S. banks and brokerages calculate withholding of taxes on foreign investorswill benefit Uncle Sam but create a slew of operational problems for market players, tax specialists said.

How to deal with the new rules, some of which became effective last week, was the topic of a KPMG Peat Marwick conference in New York this month. More than 300 tax specialists from some of the world's largest banks and brokerages attended.

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