Tax & Accounting Blog

NRA Withholding and Reporting on Payments to Foreign Nationals – Part 2: How Do I Know if My Organization Is a Withholding Agent?

1099, ONESOURCE, Tax Information Reporting, W-8 & W-9 Foreign Reporting, Withholding Management June 27, 2012

The IRS defines withholding agent very broadly. Every U.S. or foreign person who controls, holds custody of, receives, disposes of, or pays any item of income to a foreign person that is subject to NRA withholding is a withholding agent.

A withholding agent includes (without limitation) individuals, corporations, partnerships, trusts, associations or any other entity including individuals or entities acting as agents or intermediaries.

Your organization is a withholding agent even if there are other organizations or individuals who meet the definition of withholding agent as to an income payment. If more than one person is a withholding agent as to a single payment, the total withholding should not exceed 30 percent. When there are several withholding agents with regard to a single payment, they all have joint and severable liability.