Tax & Accounting Blog

Information Reporting on Form 1042-S: A New Challenge for Accounts Payable

Information Reporting on Form 1042-S: A New Challenge for Accounts Payable

Reporting income and taxes withheld on payments made to corporate vendors recently became more challenging for accounts payable (A/P) departments of both for-profit and not-for-profit organizations with the new IRS compliance focus on payments to nonresident alien individuals, foreign entities and foreign governments (collectively, foreign persons). A/P departments familiar with the ins and outs of Form … Read More

Penalties for Failure to Comply with NRA Withholding and 1042-S Information Reporting – Part 4: Penalty for Late Forms 1042-S for the Recipient

Penalties for Failure to Comply with NRA Withholding and 1042-S Information Reporting – Part 4: Penalty for Late Forms 1042-S for the Recipient

If a withholding agent fails to provide correct Forms 1042-S to recipients when due and cannot show reasonable cause, the withholding agent may be subject to a penalty for each failure. The IRS may also impose the penalty for failure to include all required information or for furnishing incorrect information on Form 1042-S. The penalty is … Read More

FATCA Proposed Regulations Are Issued by IRS

FATCA Proposed Regulations Are Issued by IRS

The long-awaited proposed tax regulations for FATCA, the Foreign Account Tax Compliance Act, were issued February 8 by the IRS.  An electronic copy is available at http://www.irs.gov/pub/newsroom/reg-121647-10.pdf .  FATCA imposes new disclosure obligations on foreign financial institutions that maintain U.S. accounts, and on certain non-financial foreign entities; and FATCA establishes new requirements to withhold … Read More

Penalties for Failure to Comply with NRA Withholding and 1042-S Information Reporting – Part 3: Penaly for Late 1042-S Submission

Penalties for Failure to Comply with NRA Withholding and 1042-S Information Reporting – Part 3: Penaly for Late 1042-S Submission

U.S.-source income payments to foreign persons that are subject to withholding or that are exempt from withholding under an Internal Revenue Code or income tax treaty provision must be reported on Form 1042-S. Unlike the rules for Form 1099, Form 1042-S is required whether or not the payer is engaged in a U.S.trade or business. There is … Read More

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Penalties for Failure to Comply with NRA Withholding and 1042-S Information Reporting: Part 2 – A Penalty for Late Deposit

The IRS prescribes when deposits of NRA withholding are required in IRS Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities. A payer who fails to make a required deposit of withheld taxes within the time prescribed is liable for a penalty on the underpayment (i.e., the excess of the … Read More

Penalties for Failure to Comply with NRA Withholding and 1042-S Information Reporting – Part 1

Penalties for Failure to Comply with NRA Withholding and 1042-S Information Reporting – Part 1

In August of 2010, the IRS announced “executing our international strategy is a top priority, and our work continues to intensify in this area.” Included in this strategy is a requirement for examiners to review withholding and reporting on payments to foreign individuals and entities during corporate audits. Other organizations should anticipate that the IRS will apply … Read More