Tax & Accounting Blog

Information Reporting on Form 1042-S, A New Challenge for Accounts Payable – Part 5: Payments to Artists and Athletes Recipient Code

Information Reporting on Form 1042-S, A New Challenge for Accounts Payable – Part 5: Payments to Artists and Athletes Recipient Code

The IRS Explanation of Codes includes footnote 2 which states that Recipient Code 09 (artist or athlete) should be used instead of Recipient Code 01 (Individual), Code 02 (Corporation), and Code 03 (Partnership) if the Income Code is 20. Income Code 20 is used for performance earnings of artists and athletes. These terms have been … Read More

Information Reporting on Form 1042-S, A New Challenge for Accounts Payable – Part 7: Nonservice Income Codes

Information Reporting on Form 1042-S, A New Challenge for Accounts Payable – Part 7: Nonservice Income Codes

IRS Publication 515, Table 1, Withholding Tax Rates on Income Other Than Personal Service Income Under Chapter 3, Internal Revenue Code, and Income Tax Treaties, assigns Income Codes to the categories of income described in the table for reduced rates of tax by treaty country.  Income Codes for some income not included in Table … Read More

Information Reporting on Form 1042-S, A New Challenge for Accounts Payable – Part 6: Income Code

Information Reporting on Form 1042-S, A New Challenge for Accounts Payable – Part 6: Income Code

As is evident from the assignment of income codes in the two overview tables and the discussions about specific types of income in IRS Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, Income Codes are used primarily to differentiate reduced rates of tax under income tax treaty provisions. This makes sense … Read More

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FinCEN to Require Mandatory E-Filing of Forms, Temporarily Exempts FBARs

The Financial Crimes Enforcement Network (FinCEN) announced February 24, 2012 that it would begin requiring that the agency’s reports be filed electronically, although a temporary exemption would be provided for electronic filing of Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR), until July 1, 2013. This does not relieve individuals of … Read More

Information Reporting on Form 1042-S, A New Challenge for Accounts Payable – Part 4: Payments to Agents and Intermediaries Recipient Code

Information Reporting on Form 1042-S, A New Challenge for Accounts Payable – Part 4: Payments to Agents and Intermediaries Recipient Code

If income is paid to an agent who acts on behalf of the beneficial owner, the beneficial owner is the recipient, not the agent, unless the agent has an agreement with the IRS to take responsibility for NRA withholding and reporting. When income is received by a partnership (Recipient Code 03) or other intermediary that … Read More

Information Reporting on Form 1042-S, A New Challenge for Accounts Payable – Part 3: Payments to Third Parties Recipient Code

Information Reporting on Form 1042-S, A New Challenge for Accounts Payable – Part 3: Payments to Third Parties Recipient Code

Occasionally, the beneficial owner of the income will request that the income that they are owed be paid to a third party. Although the payer may make the payment to the third party as requested, under the assignment of income doctrine, the income must still be reported in the name of the beneficial owner. Under … Read More