By Payroll and Entitlements Editorial Staff
The IRS has issued a revised version of Pub. 515. Generally, a foreign person is subject to U.S. withholding tax on its U.S.-source income, which is usually taxed at a rate of 30%. A reduced rate, or exemption, may apply if there is a tax treaty between the foreign person's country of residence and the United States. Issued on February 11, 2020, Pub. 515 is intended as guidance 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, the publication 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, Pub. 515 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. (Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, February 14, 2020).
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