Increasing emphasis on international withholding tax issues by the IRS

October 2011


Private companies enter into thousands of transactions each year, many of which involve making payments of interest, dividends, rents, royalties, or compensation for services. When a U.S. taxpayer makes a payment of such U.S.-source income to a foreign person or entity (non-resident aliens, or "NRA"), withholding may be required at source. Failure to comply with the withholding rules exposes the U.S. taxpayer to a host of potential liabilities, including liability for the tax that should have been withheld along with substantial penalties and interest.

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