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Publication 515 2003 Tax Year

Publication 515
Introductory Material

This is archived information that pertains only to the 2003 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.

Table of Contents

Important Change

Claiming treaty benefits without a taxpayer identification number (TIN). Generally, a foreign individual must provide a TIN to the withholding agent to get a reduced rate of withholding under an income tax treaty. However, unexpected payments may arise on short notice for which a payee may be unable to obtain a TIN prior to payment. In limited circumstances, a withholding agent who has entered into a special acceptance agent agreement with the IRS may rely on a beneficial owner withholding certificate without regard to the requirement that it include a TIN. See U.S. Taxpayer Identification Numbers, later, for more information.

Important Reminders

Note. This publication serves as the Small Entity Compliance Guide required by section 212 of the Small Business Regulatory Enforcement Fairness Act of 1996, P.L. 104–121.

Qualified intermediary employer identification number (QI-EIN). A foreign intermediary that has received a QI-EIN may represent on Form W-8IMY that it is a QI before it receives a fully executed agreement. The intermediary can claim that it is a QI unless the IRS revokes its QI-EIN. The IRS will revoke a QI-EIN if the QI agreement is not executed and returned to the IRS within a reasonable period of time. See Foreign Intermediaries, for more information.

Withholding rate on partners. Generally, a partnership must pay a withholding tax on effectively connected taxable income that is allocable to its foreign partners. For 2003, the withholding rate remains 38.6%. See Partnership Withholding on Effectively Connected Income, for more information.

Form W-8. There are four forms in the W-8 series. The form to use depends on the type of certification being made. As used in this publication, the term “Form W-8” refers to the appropriate document. For more information, see Documentation, later.

  • Form W–8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding.
  • Form W–8ECI, Certificate of Foreign Person's Claim for Exemption From Withholding on Income Effectively Connected With the Conduct of a Trade or Business in the United States.
  • Form W–8EXP, Certificate of Foreign Government or Other Foreign Organization for United States Tax Withholding.
  • Form W–8IMY, Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U.S. Branches for United States Tax Withholding.

Electronic deposit rules. You must use the Electronic Federal Tax Payment System (EFTPS) to make electronic deposits of all depository tax liabilities you incur after 2002, if you meet either of the following conditions.

  • You had to make electronic deposits in 2002.
  • You deposited more than $200,000 in federal depository taxes in 2001.

If you do not meet these conditions, electronic deposits are voluntary. For more information about depositing electronically, see Publication 966, Now a Full Range of Electronic Choices to Pay ALL Your Federal Taxes.

IRS taxpayer identification numbers for aliens. The IRS will issue an individual taxpayer identification number (ITIN) to an alien who does not have and is not eligible to get a social security number (SSN). An ITIN is for tax use only. It does not entitle an alien to social security benefits or change his or her employment or immigration status under U.S. law. For more information on ITINs, see U.S. Taxpayer Identification Numbers, later.

Hong Kong. Hong Kong and China continue to be treated as two separate countries for purposes of certain bilateral agreements, the Internal Revenue Code, and the Income Tax Regulations.

Photographs of missing children. The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1–800–THE–LOST (1–800–843– 5678) if you recognize a child.

Introduction

This publication is for withholding agents who pay income to foreign persons, including nonresident aliens, foreign corporations, foreign partnerships, foreign trusts, foreign estates, foreign governments, and international organizations. Specifically, it describes the persons responsible for withholding (withholding agents), the types of income subject to withholding, and the information return and tax return filing obligations of withholding agents. In addition to discussing the rules that apply generally to payments of U.S. source income to foreign persons, it also contains sections on the withholding that applies to the disposition of U.S. real property interests and the withholding by partnerships on income effectively connected with the active conduct of a U.S. trade or business.

Comments and suggestions.

We welcome your comments about this publication and your suggestions for future editions.

You can e-mail us while visiting our web site at www.irs.gov.

You can write to us at the following address:


Internal Revenue Service
Tax Forms and Publications
W:CAR:MP:FP
1111 Constitution Ave. NW
Washington, DC 20224

We respond to many letters by telephone. Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence.

Useful Items - You may want to see:

Publication

  • 15 Circular E, Employer's Tax Guide
  • 15–A Employer's Supplemental Tax Guide
  • 15–B Employer's Tax Guide to Fringe Benefits
  • 51 Circular A, Agricultural Employer's Tax Guide
  • 519 U.S. Tax Guide for Aliens
  • 901 U.S. Tax Treaties

Form (and Instructions)

  • SS–4 Application for Employer Identification Number
  • W–2 Wage and Tax Statement
  • W–4 Employee's Withholding Allowance Certificate
  • W–4P Withholding Certificate for Pension or Annuity Payments
  • W–7 Application for IRS Individual Taxpayer Identification Number
  • 941 Employer's Quarterly Federal Tax Return
  • 1042 Annual Withholding Tax Return for U.S. Source Income of Foreign Persons
  • 1042–S Foreign Person's U.S. Source Income Subject to Withholding
  • 1042–T Annual Summary and Transmittal of Form 1042–S

See How To Get Tax Help, near the end of this publication for information about getting publications and forms.

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