Form 1042 Compliance and Audit Strategies
Navigating Rules on Withholding on U.S.-Source Income for Foreign Persons
Recording of a 110-minute CPE webinar with Q&A
This teleconference will prepare advisors to U.S. corporations to evaluate potential Form 1042 withholding and filing responsibilities, avoid late-filing or non-filing penalties, and get ready for rigorous IRS Tier 1-level audits.
Outline
- When withholding and forms 1042, 1042-S and 1042-T are required
- Certain FDAP payments to non-resident individuals, foreign corporations, foreign partnerships, certain foreign fiduciaries/estates/trusts.
- Examples: Interest, dividends, rent, salaries, premiums, annuities, compensation
- When foreign beneficial owner of OID sells or exchanges the information
- U.S. person who is shareholder of a CFC must withhold on payments to CFC
- Situations with foreign hedge funds
- Exemptions from withholding
- Certain FDAP payments to non-resident individuals, foreign corporations, foreign partnerships, certain foreign fiduciaries/estates/trusts.
- Evolution of IRS enforcement in Form 1042 area
- December 2008 designation of withholding tax as Tier 1 issue
- Recent sending of IDRs or other informal requests related to Form 1042 to U.S. taxpayers
- Concerning proper classification of payments subject to withholding, proper classification of income-sourcing, proper validation of documentation of non-U.S. persons
- Potential more-specific issues
- Hybrid instruments
- Foreign tax credits
- Gain recognition agreements
- Dual consolidated losses
- Transfer pricing
Benefits
The panel will examine these and other relevant topics:
- Evaluating the need to withhold: Which payments to related parties trigger withholding obligations and which don't, under the IRC?
- Sharpening compliance: Are your Form 1042s and W-8s being completed correctly? Are W-8s being issued to only qualifying foreign entities and individuals?
- Preparing for IRS audits: What aspects of FDAP payments are most vulnerable to the Service's more critical exams, according to recent experience? What level of documentation is being required?
Following the speaker presentations, you'll have an opportunity to get answers to your specific questions during the interactive Q&A.
Faculty
Adam Konrad
Reinhart Boerner Van Deuren
Mr. Konrad is a member of Reinhart's Business Law, International and Tax Practices. He advises foreign and... | Read More
Mr. Konrad is a member of Reinhart's Business Law, International and Tax Practices. He advises foreign and domestic companies, private equity investors and entrepreneurs in a wide range of industries on mergers and acquisitions, commercial contracting and international tax matters. He has advised clients in industries such as manufacturing, software development, and aerospace services.
CloseCynthia Hoffman
Director of International Tax Advisory Services
Schneider Downs & Co.
She specializes in tax planning for international business expansions and has more than 25 years of experience in tax... | Read More
She specializes in tax planning for international business expansions and has more than 25 years of experience in tax planning/compliance and accounting engagements. Her client work gets into acquisitions, tax compliance for inbound and outbound investments, and cross-border transaction planning, among other activities.
CloseLaurie Hatten-Boyd
Principal, Information Reporting Practice
KPMG
She specializes in cross-border withholding and reporting issues. Before coming to the firm, she was an... | Read More
She specializes in cross-border withholding and reporting issues. Before coming to the firm, she was an attorney-advisor with the IRS Office of Associate Chief Counsel (International), where she worked exclusively on Sect. 1441 withholding and related topics.
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