With the exception of payments for goods and materials or for services provided outside of the U.S. (including U.S. Territories, Embassy’s, Military Bases, etc.) almost all other payments issued to a foreign payee are reportable and may require federal withholding. With the new regulations for FATCA, payee document requirements, withholding and reporting – compliance with those regulations is further complicated and risky.

Significant knowledge and expertise with the regulations and/or compliant procedures are crucial whenever you issue payments and even more so when a payee is determined to be foreign. Financial risks to your company could be significant if the payee is not documented properly, the correct withholding is not applied and/or the payment and withholdings are not filed properly and timely. There are many factors that you must be knowledgeable of to be thorough and execute payments that are compliant with the regulations set forth by the IRS. Demonstrating your expertise in the area of compliant processing of payments to foreign payees – is invaluable to your employer and your career. Get CNRA certified to receive the training you need and to validate your knowledge.

If you have the responsibility to issue or manage payments that may be issued to any foreign entity – individual or entity – you must be fully knowledgeable of the steps and rules that must be applied to:
  • Identifying and documenting the payee
  • Knowing what type of documentation is required and acceptable
  • Validate documents
  • Classify the payee properly as a foreign payee or U.S. Payee
  • How to determine and find the correct foreign treaty rates
  • Withholding under treaty or non-treaty rates
  • Understand the rules according to FATCA
  • Applying the rules under FATCA
  • Applying FATCA Withholding
  • What Form W-8 document is required
  • Reporting Form 1042-S Payments
  • Penalties for Form 1042-S errors
  • Filing the Annual 1042

Ongoing education offered by IRS Compliance retains your accreditation and keeps you up to date on the ever changing regulations. With the ever changing Federal and State Legislative Regulatory Requirements, the financial risks for any U.S. Organization that is not knowledgeable and the staff and business areas prepared to comply with complex regulations could face significant financial risk and the possibility that you may be required to make a public disclosure of the areas where your company is not compliant and the associated liability risk for penalties, withholding and interest.

The IRS has newsletters, bulletins and notices of new and proposed legislation to ensure that all U.S. companies have access to the information, have time to prepare and implement requirements. Your Organization is required to be knowledgeable and ensure that the regulations that apply to the issuance of payments and withholding. Therefore, ignorance of the regulations is not an acceptable defense. It is your company’s responsibility to stay educated, knowledgeable and implement any changes or processes necessary to comply.