The IRS offered a voluntary disclosure program for information reporting and withholding related to payments made to non-U.S. payees which ended in 2006. Under the VCP, a number of institutions came forward voluntarily and;
In exchange, the IRS learned about the primary areas of non-compliance such as the types of income commonly missed by withholding agents and the types of industries in which non-compliance was common.
Using this information the IRS identified withholding taxes as a Tier 1 issue and updated the Internal Revenue Manual to include procedures for examining information reporting and withholding related to payments to non-U.S. payees.
What does this mean to you?
Unfortunately, many multinational organizations are still not aware of their noncompliance because they have not identified the areas within their company where U.S. source FDAP (“Fixed Determinable Annual or Periodic”) payments are being made to non-U.S. persons. FDAP includes payments of dividends, interest, rent, fees and royalties.
Our Global Information Reporting Practice
PwC does not believe that remediation is only curing documentation. We apply a multidisciplinary approach to information reporting and withholding compliance which combines strong tax technical resources with forward-looking process and technology solutions. We believe tax compliance is driven through people, process, technology and governance. Our team combines individuals with significant operational and technology experience, including former IRS and Treasury personnel.