Get 1999 Form 8805. Foreign Partner's Information Statement Of Section 1446 Withholding Tax

This withholding tax regime requires 30% withholding on a payment of U.S. source income to a foreign person. The partnership, or a withholding agent for the partnership, must pay the withholding tax.

Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, is used to report amounts paid to foreign persons (including those presumed to be foreign) by a United States based institution or business.

Generally, any payments to international companies or organizations for U.S. based work for GW will be subject to federal withholding tax at 30%.

Form 8805, titled "Foreign Partner's Information Statement of Section 1446 Withholding Tax," is used by partnerships to provide information to a foreign partner about its share of effectively connected taxable income (ECTI) and the total tax credit allocable to it for the partnership's tax year.

Under IRC Section1446(a), a partnership must withhold on effectively connected taxable income the partnership earns that flows through the partnership and is allocable to a foreign partner.

Question 16: If a payment to a foreign person (foreign vendor) is determined to be FDAP and U.S. sourced, how much should be withheld? Answer 16: The statutory withholding rate is generally 30%. This rate should be generally applied to the gross amount of the payment.

Sec. 1.1441-7(a). A withholding agent is responsible to withhold tax on payments of U.S. sourced, FDAP income to foreign persons and to make deposits of such tax to the U.S. Treasury absent an applicable exclusion provided by the Code or an applicable income tax treaty.

The United States asserts jurisdiction to tax foreign corporations only if they are engaged in business in the United States or receive income from sources within the United States.