Taxpayers who make payments of certain US-source income to foreign persons must comply with certain withholding and reporting requirements. The IRS recently announced an LB&I compliance campaign to examine taxpayers who make such payments but do not withhold, pay, and/or report as required.
This panel explains who is a withholding agent required to withhold tax on payments to foreign payees, some of the surprising ways in which they can become liable for tax due on money they paid out to others, and how the IRS is pursuing them for payment. Also discussed are the main impact and requirements of the Foreign Account Tax Compliance Act for withholding agents.
Identify regulations related to foreign entities and their U.S. tax withholdings.
Christopher Shott joined the IRS Office of Chief Counsel, LB&I Division in Manhattan in 2008. Since 2011 Mr. Shott has focused his practice on information reporting and withholding working closely with Associate Chief Counsel International to provide legal assistance to the Foreign Payments Practice on various Chapter 3 and 4 issues. Mr. Shott also provides substantive legal assistance to examination teams conducting withholding examinations.
Michael is a Senior Manager in Ernst & Young LLP’s Tax technology and Transformation team within the Financial Services Organization. Michael focuses on the interpretation and implementation of IRS regulations. Prior to joining the firm he was responsible for the implementation of FATCA at a broker/dealer. Before industry, Michael was an associate with a boutique law firm focusing on tax controversy.
Tim joined Deutsche Bank in 2012 and is currently the Bank’s FACTA and Qualified Intermediary Responsible Officer and heads the Indirect and Operational Tax group. Tim also oversees the Bank’s tax controversies including its withholding tax audits. Prior to joining the Bank, Tim was Counsel at White & Case LLP and an attorney with the Office of Chief Counsel in Manhattan.
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