Tax & Accounting Blog

NRA Withholding and Reporting on Payments to Foreign Nationals – Part 7: What if the Service Provider Wasn’t Authorized under the Immigration Rules to Provide the Services?

1099, ONESOURCE, Tax Information Reporting, TIN Compliance, W-8 & W-9 Foreign Reporting, Withholding Management July 11, 2012

You must apply the proper withholding and reporting rules based on tax residency status to payments to foreign national recipients regardless of whether the recipient was authorized to provide the services or not. It is the provision of services by an unauthorized individual that is a violation of the immigration laws. However, your organization’s payment to the individual and reporting document (and the recipient’s resulting tax return) is evidence of that unauthorized service.

If your organization knowingly used the services of an unauthorized individual, immigration law converts this individual to your employee for employment sanction purposes.