Tax & Accounting Blog

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 … Read More

The IRS announced on May 2, 2012 that it intends to delay the effective date for reporting basis on sales of debt instruments and options. The Energy Improvement and Extension Act of 2008 requires brokers to report the basis on sales of certain securities. The Act applies to stock acquired on or after January 1, … Read More

The IRS has addressed the facts that would cause a payer who has no actual information about a recipient to have a reason to know that the recipient might be a nonresident alien: The individual is not a U.S. citizen or immigrant (popularly called a green-card holder). A nonimmigrant is a U.S. person only if substantially … Read More

On May 31, 2012, the IRS released drafts of new Forms W-8BEN. A foreign person uses Form W-8 to certify their withholding status and eligibility for treaty benefits. The IRS updated the form to reflect changes required by the Foreign Account Tax Compliance Act (FATCA). There are two separate draft forms. Form W-8BEN is for foreign individuals. Form … Read More

The Section 1441 regulations provide presumptions that you must follow in order to avoid liability for underwithholding when you make payments to recipients for whom you have no documentation. (See the table in IRS Publication 515  for references to specific withholding regulations for different types of payments.) An individual recipient on whom you have no … Read More

No, unless the state has specific rules defining residency that are tied to a recipient’s federal tax residency status. Lacking such special rules, residency for state tax purposes is determined for foreign nationals under the same rules that apply to U.S. citizens. … Read More