Chapter 3

The Internal Revenue Service recently released an online tool to help U.S. withholding agents comply with withholding and reporting obligations on IRS Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding.  Forms 1042-S are issued by withholding agents to non-U.S. beneficial owners of U.S. source FDAP income under Chapter 3 and to non-U.S. payees who receive U.S. source withholdable payments under Chapter 4.  Given the complexity of the Form 1042-S, this tool provides withholding agents with an opportunity to screen their draft Forms 1042-S for errors prior to filing.  The Form 1042-S Data Integrity Tool performs a quality review of data before IRS submission at no cost to the user.
Continue Reading IRS Releases Form 1042-S Data Integrity Tool to Assist Withholding Agents in Complying With Withholding and Reporting Obligations

Over the last few years, the Justice Department has worked with the IRS to more aggressively prosecute cases involving employment tax noncompliance and the failure to remit trust fund taxes to the U.S. Treasury.  Trust fund taxes are taxes withheld from the wages of employees such as federal income tax withholding and FICA tax withholding.  Owners, corporate officers, and employees who are responsible for remitting such taxes may also be found to be personally liable for the failure to pay over trust fund taxes and, as the following described cases indicate, they may face criminal prosecution for such failures. 
Continue Reading Justice Department Continues Criminal Prosecutions in Employment Tax Cases

Yesterday, the IRS added three new FAQs to its list of frequently asked questions on compliance with the Foreign Account Tax Compliance Act (“FATCA”).  The questions address the need for withholding agents to obtain foreign TINs or dates of birth for nonresident alien or foreign entity on beneficial owner withholding certificates, e.g., Forms W-8BEN

John Sweeney, Branch 8 Chief in the IRS Office of Associate Chief Counsel International, said on June 2 that proposed and temporary regulations limiting refunds and credits claimed by nonresident alien individuals and foreign corporations for taxes withheld under Chapter 3 and Chapter 4 of the Code will be released soon.  According to Sweeney, who