IRS Plans Tougher Rules on Withholding From Foreign Taxpayers

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April 28 — Withholding agents for foreign taxpayers who fail to deposit the correct amount will soon see new regulations regarding claims or refunds.

In Notice 2015-10, issued April 28, the Internal Revenue Service outlined concerns within the agency and Treasury Department that withholding agents aren't always compliant with deposit amounts withheld under tax code Chapters 3 or 4, or reported on Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding.

“These regulations will provide that an otherwise allowable claim for refund or credit made by a claimant that is the beneficial owner of a withheld payment is only available to the extent that the relevant withholding agent deposited the amount withheld,” the notice said.