U.S. Partnerships With Foreign Partners: Navigating Withholding, Informational Reporting, and Payment Requirements

Determining ECI, FDAP, FIRPTA Income Classifications, Treaty Benefits, Basis Adjustments and Sale Treatment

Recording of a 110-minute CPE webinar with Q&A


Conducted on Tuesday, June 15, 2021

Recorded event now available

or call 1-800-926-7926
Course Materials

This course will provide tax advisers and compliance professionals with a thorough and practical guide to the issues faced by U.S. partnerships with foreign partners. The panel will discuss the various withholding and reporting requirements with respect to non-U.S. partners.

Description

Tax advisers serving partnerships with foreign (non-U.S.) partners have unique tax compliance and planning challenges. U.S. tax law provides several different withholding requirements for foreign partners, depending on the type of income the partnership receives and how it conducts its activities. In addition, the Service requires U.S. partnerships to collect and report specific information regarding their non-U.S. partners. Adding to the complexity, tax reform has made several significant alterations to the withholding and reporting requirements for foreign partners of U.S. partnerships.

For partnerships engaged in a U.S. trade or business, their income typically will be deemed effectively connected income, which has different tax results for both withholding consequences and tax rates than income not generated from being engaged in a trade or business.

For income that is not effectively connected to a U.S. trade or business, partnerships will have separate withholding and reporting obligations. Importantly, the overlay of FATCA withholding requirements to the chapter 3 regime often means partnerships and other business entities must make two different determinations of whether withholding is required. Partnership tax advisers also must understand the effect of treaties on the treatment of a partnership and its partners, as they may reduce or eliminate withholding requirements and income taxes on certain types of income.

Finally, partners and partnerships must also comply with special withholding and reporting rules upon the sale or transfer of a partnership interest. In addition to the existing FIRPTA regime, tax reform introduced a new Section 1446(f) which added additional withholding and reporting obligations.

Listen as our expert panel provides a comprehensive and practical guide to the tax planning and reporting issues specific to partnerships with foreign partners.

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Outline

  1. Income taxation of partnerships with foreign partners
  2. Blocker corporations and foreign partnerships
  3. Partnership Chapter 3 withholding and reporting
  4. Partnership Chapter 4 (FATCA) withholding and reporting
  5. IRC Section 1446(f) withholding requirements
  6. Filing requirements

Benefits

The panel will discuss these and other important issues:

  • Documentation partnerships must obtain from foreign partners
  • Withholding requirements for effectively-connected income for foreign partners under Section 1446
  • Withholding requirements for FDAP income under Chapter 3 and 4, including the impact of treaty positions on these obligations
  • Withholding requirements under FIRPTA and Section 1446(f) upon transfers of partnership interests
  • Impact of blocker corporations and other intermediate entities
  • Filing requirements

Faculty

Kaplan, Joshua
Joshua S. Kaplan

Managing Director
KPMG US

Mr. Kaplan provides advice on a wide range of inbound and outbound international tax issues, with a particular focus on...  |  Read More

Nishida, Danielle
Danielle Nishida

Principal, Information Reporting & Withholding Tax
KPMG US

Ms. Nishida joined KPMG in April 2013 and practices in information reporting. She was previously an attorney in the...  |  Read More

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