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Topic: Tax withholding in the United States

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	U.S. Treasury - Fact Sheet on the History of the U.S. Tax System
		These taxes are called direct taxes because they are a recurring tax paid directly by the taxpayer to the government based on the value of the item that is the basis for the tax.
		Even before the United States entered the Second World War, increasing defense spending and the need for monies to support the opponents of Axis aggression led to the passage in 1940 of two tax laws that increased individual and corporate taxes, which were followed by another tax hike in 1941.
		Tax cuts following the war reduced the Federal tax burden as a share of GDP from its wartime high of 20.9 percent in 1944 to 14.4 percent in 1950.
	www.treas.gov /education/fact-sheets/taxes/ustax.shtml (5631 words)

	Withholding tax - Wikipedia, the free encyclopedia
		The principle of a withholding tax is that it is withheld (retained) by the payer and given directly to the taxation authorities.
		The country where the dividend is paid may withhold tax and simply retain it, or it may permit payment gross but inform the tax authorities in the country of residence (though not in the case of tax havens).
		In the United Kingdom, this is not explicit: tax is withheld at source unless the saver submits an R85 form to claim exemption.
	en.wikipedia.org /wiki/Withholding_tax (423 words)

	Foreign Student Withholding
		Tax withholding is not required for qualified scholarships from U.S. sources paid to a candidate for a degree.
		Tax withholding is required on the portion of a scholarship or fellowship paid to a nonresident alien which does not constitute a qualified scholarship.
		The withholding rate is 14% on taxable scholarship and fellowship grants paid to nonresident aliens temporarily present in the United States in "F," "J," "M," or "Q" nonimmigrant status.
	www.isu.edu /finserve/foreign/index.html (277 words)

	Willys H. Schneider, Selected United States Tax Issues In Cross-Border Securitizations, 8 Duke J. of Comp. & Int'l L. ... (Site not responding. Last check: 2007-10-20)
		The United States and many other countries impose a withholding tax on the gross amount of interest paid to certain foreign persons not otherwise engaged in business in the country from which the interest is paid.
		Frequently, this withholding tax is reduced or eliminated pursuant to the terms of an income tax treaty between the countries of the payee and the payor.
		Interest that is subject to U.S. withholding tax at a reduced treaty rate is treated for this purpose as not subject to U.S. tax to the extent of the proportion of the U.S. withholding tax rate under the applicable treaty to the statutory withholding tax rate.
	www.law.duke.edu /journals/djcil/articles/DJCIL8P453.HTM (5632 words)

	Chapter_8
		Amounts paid to foreign tax exempt organizations are exempt from withholding to the extent that the income which they receive is not income from a trade or business unrelated to their charitable purpose.
		For the portfolio withholding exemption to apply to interest received by a foreign holder of an obligation in registered form, a further requirement is that the withholding agent (U.S. payor) must receive a statement meeting prescribed requirements that the beneficial owner of the obligation is not a U.S. person.
		Where the withholding agent withholds tax in excess of the required amount to be withheld, the foreign taxpayer is entitled to a refund of such over withholding.
	www.taxlaw.ms /chapter_8.htm (8599 words)

	The Expatriate Administrator
		Net long-term capital gain is subject to tax at a maximum rate of 15 percent (reduced to 5 percent for taxpayers in the 10 or 15 percent marginal tax brackets).
		Since nonrecognition (tax deferral) is not the equivalent of income exclusion, if a seller qualifies to exclude some or all of the gain from the sale of his or her principal residence, the withholding exception for nonrecognition transactions does not apply.
		Michel decides to apply for a withholding certificate since the amount required to be withheld (absent a withholding certificate) of $70,000 exceeds his maximum tax liability of $11,250.
	www.us.kpmg.com /microsite/tax/ies/tea/autumn2005/article4.asp (2915 words)

	UNITED STATES-HUNGARY INCOME TAX CONVENTION
		Each country may tax dividends paid by its companies to shareholders resident in the other (i.e., they may impose a dividend withholding tax on shareholders resident in the other country), but the rate of tax may not exceed 15 percent if the beneficial owner is a resident of the other country.
		Thus, for example, the United States would not be required to tax in the same way a U.S. citizen and a Hungarian citizen, neither of whom are residents of the United States, because the U.S. citizen is taxed by the United States on his worldwide income while the Hungary citizen is not.
		In the case of the United States these are the Federal income taxes imposed by the Internal Revenue Code, the excise tax on insurance premiums paid to foreign insurers (Code section 4371) and the excise tax with respect to private foundations (Code section 4940).
	sfkornyek.szabadsagharcos.org /jog/ushuntax.html (12464 words)

	Withholding Tax Issues on Repartriation of Funds to Foreign Taxpayer
		You have requested advice regarding the federal and California tax withholding requirements with respect to funds that will be repatriated to a resident and citizen of Thailand.
		The payment of this tax is enforced through a withholding procedure in which the person making the payment to the foreign person is obligated to withhold the tax and pay it directly to the U.S. government.
		There could be a 30% tax at the federal level and 7% withholding at the state level, depending on the nature of the damages and whether those damages are sourced in California.
	www.taxprophet.com /foreign/foreign_withholding_memo.shtml (1078 words)

	UNC CH Payroll
		Financial aid awarded to nonresident alien students may be subject to federal income tax withholding based on the student's visa type, the degree path of the student, and the existence of a U.S. tax treaty with the student's country of residence.
		The federal income tax withholding rate may be 0%, 14%, or 30% depending on the circumstances, and the tax rate may apply to only a portion of the total financial aid awarded.
		For purposes of the tax law, individuals may qualify as resident aliens by satisfying either the "green card test," the "substantial presence test," or by electing to be treated as a resident alien during the first year in which they are present in the United States.
	www.unc.edu /finance/payroll/nrapol12-5-01.htm (4217 words)

	History of the Income Tax in the United States — Infoplease.com
		The withholding tax on wages was introduced in 1943 and was instrumental in increasing the number of taxpayers to 60 million and tax collections to $43 billion by 1945.
		The tax reduction, however, was partially offset by two tax acts, in 1982 and 1984, that attempted to raise approximately $265 billion.
		Along with that tax hike, Congress passed a cornucopia of tax breaks, which for individuals included an option to deduct the payment of whichever state taxes were higher, sales or income taxes.
	www.infoplease.com /ipa/A0005921.html (1162 words)

	Tax withholding in the United States - Wikipedia, the free encyclopedia
		In the United States income tax system, employers are required to withhold a portion of each employee's income and pay it directly to the U.S. Internal Revenue Service.
		This withholding acts as a prepayment of tax they will owe at the end of the year, as well as a direct payment of certain other taxes.
		A taxpayer will get a tax refund if his or her withholding for the year was greater than the income tax he actually owed.
	en.wikipedia.org /wiki/Tax_withholding_in_the_United_States (182 words)

	PeetLaw -- Taxes
		Depending on when taxes are due and when the closing takes place, the buyer or seller may receive a credit at the closing for property taxes that are paid covering a period of time that the opposite party owned the property.
		The tax is discounted to one half of one percent for the first $100,000.00 of the purchase price if you use the property as your primary residence.
		The tax is computed based on a matrix taking into account the profit the seller is making from the sale of the land (the VLGT is not imposed on the profits from the sale of the buildings) and the amount of time the seller has owned the property.
	www.peetlaw.com /taxes.html (631 words)

	Criminal Tax Manual 11.00 -- FRAUDULENT WITHHOLDING EXEMPTION CERTIFICATE
		The defendant supplied his or her employer with a signed withholding statement [or failed to supply the employer with a signed withholding exemption certificate]; [FN4] 3.
		Evidence that the defendant had a tax liability in a prior year, and then filed a Form W-4 in which 99 exemptions were claimed, as well as a document that falsely declared he had no tax liability in the prior year and anticipated none in the year in issue.
		Evidence of prior tax paying history and of attempts by the defendant's employer and the Internal Revenue Service to explain legal requirements to the defendant is sufficient to sustain the jury's finding that the defendant was aware of his legal obligations and intentionally chose not to comply.
	www.usdoj.gov /tax/readingroom/2001ctm/11ctax.htm (2119 words)

	EVOLUTION OF FEDERAL INCOME TAX WITHHOLDING: THE MACHINERY OF INSTITUTIONAL CHANGE (Site not responding. Last check: 2007-10-20)
		The second is that the tax ``cancellation'' involved was a sham and was understood to be a sham by a significant number of government officials involved in its passage.
		The fact that tax forgiveness was both a sham and an essential ingredient of public support for the income tax withholding bill was widely discussed in the final debates.
		Since the withheld tax on interest paid on a typical savings account averages less than one percent of asset value over the course of the year, at worst the `loss' of interest on the withheld tax would be less than one-tenth of one percent of asset value.
	www.freerepublic.com /focus/news/785510/posts (10935 words)

	Publication 515: Withholding of Tax on Nonresident Aliens and Foreign Entities
		A withholding agent may also be responsible for withholding if a foreign person transfers a U.S. real property interest to the agent, or if it is a corporation, partnership, trust, or estate that distributes a U.S. real property interest to a shareholder, partner, or beneficiary that is a foreign person.
		Gross investment income from sources within the United States paid to a qualified foreign private foundation is subject to NRA withholding at a 4% rate (unless exempted by a treaty) rather than the ordinary statutory 30% rate.
		A withholding rate pool is a payment of a single type of income, determined in accordance with the categories of income reported on Form 1042-S that is subject to a single rate of withholding.
	www.taxcut.com /tc/2005/pubs/files/p515-text.htm (18976 words)

	Tax Law Committee Newsletter February 1999 - ABA Young Lawyers Division
		The business must be located in the United States, cannot be a publicly traded company within three years of the date of the decedent’s death, and cannot be a business with greater than 35% personal holding company type income (i.e., portfolio income).
		The estate tax recapture is especially onerous since a qualifying heir who triggers the recapture tax may not be the party who is liable for the estate taxes.
		Form W-8BEN may be used to claim a reduced rate of, or exemption from, withholding as a resident of a foreign country with an income tax treaty with the United States.
	www.abanet.org /yld/tax/newsletter2.html (2199 words)

	revrul85-4
		If, under the provisions of an income tax treaty with the U.S., the nonresident alien racehorse owner is found to have permanent establishment in the U.S., the owner may be exempt from withholding, provided the owner files a statement or Form 4224 with the withholding agent pursuant to section 1.1441-4(a) of the regulations.
		X, as withholding agent, is required, pursuant to section 1441(a) of the Code, to withhold tax a rate of 30 percent on purses paid to nonresident alien racehorse owners.
		X must withhold tax at the rate of 30 percent on any purse paid to a nonresident alien racehorse owner in the absence of definite information filed on Form 1001 that such owner has not raced, or does not intend to enter, a horse in another race during the taxable year.
	www.taxlinks.com /rulings/1985/revrul85-4.htm (1002 words)

	Tax FAQ - United States Mission to Germany
		Qualification requirements and forms to be completed are explained in IRS Publication 54 “Tax Guide for U.S. Citizens and Resident Aliens Abroad”.
		If a tax liability is incurred for one of those years, then you should generally file returns for an additional two prior years (for a total of 5 tax years).
		Sales taxes are assessed by the individual states and cities, and as such each has complete autonomy in administering its taxes.
	www.usembassy.de /germany/faqs/tax.html (1792 words)

	iStudentCity - Finance Center - International Student Credit Card
		When you come to the United States, one of the first things you will probably want to do is open a bank account in which to deposit your money.
		If you are a nonresident alien, the United States generally taxes you on interest, dividends and capital gains from investment accounts at a flat rate of 30 percent.
		Residency status for tax purposes in the United States is not the same as residency status for immigration purposes.
	www.istudentcity.com /Finance/finance_taxguy_banks.asp (1039 words)

	FIRPTA Withholding
		The purchaser/buyer may be held liable for the tax that should have been withheld on the purchase.
		One of the most common exceptions to FIRPTA withholding is that the transferee (purchaser/buyer) is not required to withhold tax in a situation in which the purchaser/buyer purchases real estate for use as his home and the purchase price is not more than $300,000.
		For additional information on the withholding rules that apply to partnerships, refer to discussion under partnership withholding.
	www.irs.gov /businesses/small/international/article/0,,id=105000,00.html (525 words)

	NRA Tax Office - Resources - Forms
		To be completed by Nonresident Aliens who qualify for a tax treaty benefit from tax withholding for compensation.
		To be completed by Nonresident Aliens who qualify for a tax treaty benefit from tax withholding for scholarships/fellowships.
		Tax return forms for anyone residing in Maryland during the tax year or otherwise meeting definition of statutory resident.
	wwwnew.towson.edu /nratax/resources/forms.htm (395 words)

	withholding \| English \| Dictionary & Translation by Babylon
		Used in the context of securities, this refers to the illegal practice of a public offering participant keeping some shares in a private account or with a family member, employee, or dealer to profit from the higher market price of a hot issue.
		Used in the context of taxes, this refers to the withholding by an employer of a certain amount of an employee's income in order to provide for that employee's tax liability.
		Also used to refer to the withholding by corporations and financial institutions of a flat 10% of interest and dividend payments due to securities holders.
	www.babylon.com /definition/withholding (324 words)

	Tax Treaty Benefits
		An individual must have a tax identification number to apply for a tax treaty benefit.
		Tax Services will analyze each person's visa history, payment type, and specific treaty language to determine eligibility for the exemption.
		Tax Services will review the individual's visa history, payment type, and specific treaty language to determine eligibility for the exemption.
	vpf-web.harvard.edu /ofs/tax_services/emp_tre.shtml (389 words)

	ATO ID 2006/141 - Interest Withholding Tax Exemption: United States limited liability company (Site not responding. Last check: 2007-10-20)
		In determining liability to Australian tax on income received by a non resident, it is necessary to consider not only the income tax laws but any applicable tax treaty contained in the Agreements Act.
		The tax treaty between Australia and the US (the US Convention) and the protocol amending the US Convention (the United States Protocol) contained in schedules 2 and 2A respectively of the Agreements Act operate to avoid double taxation of income received by Australian and US residents.
		...the State of source should take into account, as part of the factual context in which the Convention is to be applied, the way in which an item of income, arising in its jurisdiction, is treated in the jurisdiction of the person claiming the benefits of the Convention as a resident.
	law.ato.gov.au /atolaw/view.htm?docid=AID/AID2006141/00001 (1382 words)

	The MIT Press: Author Royalties
		Examples of acceptable documents include, but are not limited to: a passport; a driver's license; documents issued by the US Immigration and Naturalization Service; an identity card issued by a state or national government authority; a foreign military identification card; a foreign voter registration certificate; and birth, marriage, or baptismal certificates.
		If you decide not to obtain a federal identification number to use to claim a tax treaty benefit on income derived in the US, MIT will be required by the tax law to withhold the maximum, currently 30%, of any amount payable to you which is subject to US tax.
		According to the IRS, the new form will remain in effect indefinitely, "as long as the filer's status and the information relevant to the filer's certification on the form remains unchanged." You will need to periodically review your copy of the form to make sure the relevant information in it is up to date.
	mitpress.mit.edu /authors/taxinfo.html (693 words)

	7.2.3 - United States Tax Treaties
		Under these treaties, residents of foreign countries are taxed at a reduced rate, or are exempt from U.S. income taxes on certain items of money they receive from sources within the United States.
		A. The Nonresident Alien Exemption Form (IRS Form 8233) "Exemption From Withholding on Compensation for Independent Personal Services of a Nonresident Alien Individual" should be filed annually in the Payroll Office by nonresidents claiming exemption from withholding on wage income or research assistant income due to a tax treaty.
		Nonresident aliens, who are not from a treaty country or whose tax treaty does not exempt their income, must have taxes withheld.
	www.bfs.uwm.edu /ASM/view.aspx?id=7.2.3&d=1 (429 words)

	NRA Tax Office - US Taxes - Income Tax Treaties, Page 2
		Form 8233 Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual – To claim a tax treaty benefit for compensation income, including employee, consultant, honoraria, and independent contractor payments.
		Tax treaty exemption claims must be renewed annually prior to January 1st in the following manner:
		Scholarship tax treaty exemption - Every 3 years for the period in which treaty is valid.
	wwwnew.towson.edu /nratax/ustaxes/incometaxtreaties2.htm (181 words)

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