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International Tax Blog - New and Interesting International Tax Issues

International PLRs of Note for the 34th week of 2014


Today the IRS published the following Chief Counsel Advice relating to international taxation.

CCA 201434021 - A withholding agent made interest payments to two nonresident aliens, A and B, without withholding 30% as required by Code §1441.  The withholding agent treated the payments as portfolio interest not subject to withholding, but did not have the required documentation from the payees to support a claim for the portfolio interest.  The withholding agent would be liable for the tax if it was required to withhold but did not.  Code §1461.

The CCA provided that a reduced rate of withholding on portfolio interest can be established after payments are made if a withholding certificate or documentary evidence is provided before the expiration of the period of limitation for claiming a refund of tax with respect to such interest.  Treas. Reg. §1.871-14(c)(3)(i). 

Because A did not file a U.S. tax return, A's period of limitation could not have started, so the documentation can be obtained at any time.  However, because B did file a U.S. tax return, the withholding agent generally has three years from the date the return was filed to obtain documentation supporting the portfolio interest. 

Tags: 1441 U.S. Withholding Taxes, Authority - PLRs / CCAs, Form W-8 BEN / BEN-E