Tax & Accounting Blog

Treaty Exemptions for Business Profits – Part 3: Treaty Exemptions from Withholding

Treaty Exemptions for Business Profits – Part 3: Treaty Exemptions from Withholding

A foreign entity may claim a treaty-based exemption from NRA withholding by submitting a Form W-8BEN with the treaty claim described in Part 2 and the income for which an exemption is being claimed described on line 10. To be valid, the Form W-8BEN must include the entity’s U.S. Employer Identification Number (EIN). An … Read More

IRS Requests Comments on the Tax Consequences of a Decanting Trust

IRS Requests Comments on the Tax Consequences of a Decanting Trust

In a Notice, the IRS has requested comments on when and under what circumstances transfers by a trustee of all or a part of the principal of an irrevocable trust (Distributing Trust) to another irrevocable trust (Receiving Trust), sometimes called decanting, that result in a change in the beneficial interests in the trust aren’t subject … Read More

Withholding on U.S. Business Income of Foreign Vendors – Part 4: Treaty Exempt ECI

Withholding on U.S. Business Income of Foreign Vendors – Part 4: Treaty Exempt ECI

A beneficial owner of ECI resident in a tax treaty country may be able to claim an exemption from tax under an applicable income tax treaty provision. An entity with ECI that is not attributable to a permanent establishment in the United States (as that term is defined by the applicable tax treaty), may make a … Read More

Deadline Approaching for Executors to Make Portability Election for Post-2010 Estates

Deadline Approaching for Executors to Make Portability Election for Post-2010 Estates

In a notice and accompanying news release, IRS reminded executors of the estates of married decedents dying after 2010 that they must file an estate tax return in order to pass along the unused estate and gift tax exclusion amount, available for the first time this year, to their surviving spouse. The first estate tax … Read More

Withholding on U.S. Business Income of Foreign Vendors – Part 3: Effectively Connected Income Not Exempt from Withholding

Withholding on U.S. Business Income of Foreign Vendors – Part 3: Effectively Connected Income Not Exempt from Withholding

Non-U.S. individuals may use Form W-8ECI for their Effectively Connected Income (ECI), such as rents from U.S. real property for which the beneficial owner elected ECI treatment on Form 1040NR. Non-U.S. individuals are restricted by the regulations from using Form W-8ECI for their compensation for personal services performed in the U.S. (This restriction is indicated in the … Read More