I have a question about US source income. On the one hand PublicationI don't have a definitive answer for you, but here's my thinking on the matter. As a corporate director, I would expect that attendance at board meetings would be required. Attendance via teleconference would be for the convenience of the director and
519 implies that income from a US source is not taxable to a noncitizen/nonresident whose services are all performed outside the US.
On the other hand in other places the IRS says that all US source
income for nonresident aliens is subject to tax.
In my case there is the director of a US corporation, who receives
directors fees for services that are all performed outside the US. Is
that considered US source income? Sorry, but I haven't been able to
fine the answer to that question.
Thanks for any help you can give.
--
Stu
http://DownToEarthLawyer.com
--
I have a question about US source income. On the one hand Publication
519 implies that income from a US source is not taxable to a noncitizen/nonresident whose services are all performed outside the US.
On the other hand in other places the IRS says that all US source
income for nonresident aliens is subject to tax.
In my case there is the director of a US corporation, who receives
directors fees for services that are all performed outside the US. Is
that considered US source income? Sorry, but I haven't been able to
fine the answer to that question.
Thanks for any help you can give.
--
Stu
http://DownToEarthLawyer.com
I don't have a definitive answer for you, but here's my thinking
on the matter. As a corporate director, I would expect that
attendance at board meetings would be required. Attendance via
teleconference would be for the convenience of the director and
not for the necessity of the corporation. Therefore the services
would be performed inside the US, regardless of his physical
location. This differs from the situation where the corporation
might hire someone internationally to perform some service that
can be done anywhere or needs to be done internationally. Of
course, my reasoning avoids any consideration of COVID impacts on
the rtax treatment. Also, you need to consider any tax treaty
provisions that might cover this.
My thought, not necessarily definitively correct, is that the
director's services are wages, which are typically referred to a
compensation for dependent services in model treaties.
As such, the wages are performed at the physical location(s) of
the US Corporation and are then deemed to be performed within the
US. Therefore subject to US withholding taxes. (For example,
looking at the other directors, what state taxes are withheld from
the compensation? That would be where the work is defined as
occurring.)
Alternatively, the US Corporation may instead try to define that
the director was performing the service within their country, but
then that would subject the US Corporation to payroll obligations
within the foreign country, and possibly also to sales taxes,
corporate taxes, and other regulatory issues, given that the US
Corporation then has stated that they have a physical presence in
the foreign country. (Most treaties define physical presence as
then also conferring tax and other obligations to the foreign
country where the physical presence occurs.) Accordingly, it is
highly probable that the US Corporation will not find it to the
corporation's benefit to attempt to claim that the director is not
subject to US withholding tax due to the issues that will happen
should they attempt this. Certainly not for a single person.
Since I do not know the country of residence of the foreign
director, I would be unable to research further into any treaty
modifiers to the situation. I would suggest that you consult with
someone familiar with the applicable treaty to determine further
refinements and/or modifiers. For example
On Tuesday, 7 September 2021 at 11:31:40 UTC-4, Stuart O. Bronstein wrote:
I have a question about US source income. On the one hand Publication
519 implies that income from a US source is not taxable to a >>noncitizen/nonresident whose services are all performed outside the US.
On the other hand in other places the IRS says that all US source
income for nonresident aliens is subject to tax.
In my case there is the director of a US corporation, who receives >>directors fees for services that are all performed outside the US. Is
that considered US source income? Sorry, but I haven't been able to
fine the answer to that question.
Thanks for any help you can give.
My thought, not necessarily definitively correct, is that the director's >services are wages, which are typically referred to a compensation for >dependent services in model treaties. . . .
On Tuesday, September 7, 2021 at 11:31:40 AM UTC-4, Stuart O. Bronstein wrote:and not for the necessity of the corporation. Therefore the services would be performed inside the US, regardless of his physical location. This differs from the situation where the corporation might hire someone internationally to perform some service
I have a question about US source income. On the one hand PublicationI don't have a definitive answer for you, but here's my thinking on the matter. As a corporate director, I would expect that attendance at board meetings would be required. Attendance via teleconference would be for the convenience of the director
519 implies that income from a US source is not taxable to a
noncitizen/nonresident whose services are all performed outside the US.
On the other hand in other places the IRS says that all US source
income for nonresident aliens is subject to tax.
In my case there is the director of a US corporation, who receives
directors fees for services that are all performed outside the US. Is
that considered US source income? Sorry, but I haven't been able to
fine the answer to that question.
Thanks for any help you can give.
--
Stu
http://DownToEarthLawyer.com
--
Ira Smilovitz, EA
Leonia, NJ
A director's services are never wages unless he is also providing
services to the corporation as an employee.
On 9/8/21 7:07 PM, ira smilovitz wrote:and not for the necessity of the corporation. Therefore the services would be performed inside the US, regardless of his physical location. This differs from the situation where the corporation might hire someone internationally to perform some service
On Tuesday, September 7, 2021 at 11:31:40 AM UTC-4, Stuart O. Bronstein wrote:
I have a question about US source income. On the one hand PublicationI don't have a definitive answer for you, but here's my thinking on the matter. As a corporate director, I would expect that attendance at board meetings would be required. Attendance via teleconference would be for the convenience of the director
519 implies that income from a US source is not taxable to a
noncitizen/nonresident whose services are all performed outside the US.
On the other hand in other places the IRS says that all US source
income for nonresident aliens is subject to tax.
In my case there is the director of a US corporation, who receives
directors fees for services that are all performed outside the US. Is
that considered US source income? Sorry, but I haven't been able to
fine the answer to that question.
Thanks for any help you can give.
--
Stu
http://DownToEarthLawyer.com
--
Ira Smilovitz, EA
Leonia, NJ
I don't have a definitive answer either, BUT, I have always interpreted
the code (864 and 871) and its accompanying regulations to mean physical presence in the 48 states and the D.C. whenever it says "engaged in a
trade or business in the United States" when dealing with personal
service income. Sitting in front of a terminal in Belgium is no
different then making a telephone call from Belgium. I don't believe
the issue of convenience or necessity enters into the picture.
I just don't see how an NRA can have effectively connected personal
service income without physically being present in the U.S.
--
The following article supports Alan's position (and contradicts my earlier thinking) that a non-resident alien's director's compensation for services performed outside the US would not be taxable to the US.
https://www.dlapiper.com/en/uk/insights/publications/2015/05/global-tax-news-may-2015/international-tax-and-withholding-considerations/
Ira Smilovitz, EAand not for the necessity of the corporation. Therefore the services would be performed inside the US, regardless of his physical location. This differs from the situation where the corporation might hire someone internationally to perform some service
Leonia, NJ
On Thursday, September 9, 2021 at 7:35:00 PM UTC-4, Alan wrote:
On 9/8/21 7:07 PM, ira smilovitz wrote:
On Tuesday, September 7, 2021 at 11:31:40 AM UTC-4, Stuart O. Bronstein wrote:
I have a question about US source income. On the one hand PublicationI don't have a definitive answer for you, but here's my thinking on the matter. As a corporate director, I would expect that attendance at board meetings would be required. Attendance via teleconference would be for the convenience of the director
519 implies that income from a US source is not taxable to a
noncitizen/nonresident whose services are all performed outside the US. >>>> On the other hand in other places the IRS says that all US source
income for nonresident aliens is subject to tax.
In my case there is the director of a US corporation, who receives
directors fees for services that are all performed outside the US. Is
that considered US source income? Sorry, but I haven't been able to
fine the answer to that question.
Thanks for any help you can give.
--
Stu
http://DownToEarthLawyer.com
--
I don't have a definitive answer either, BUT, I have always interpreted
Ira Smilovitz, EA
Leonia, NJ
the code (864 and 871) and its accompanying regulations to mean physical
presence in the 48 states and the D.C. whenever it says "engaged in a
trade or business in the United States" when dealing with personal
service income. Sitting in front of a terminal in Belgium is no
different then making a telephone call from Belgium. I don't believe
the issue of convenience or necessity enters into the picture.
I just don't see how an NRA can have effectively connected personal
service income without physically being present in the U.S.
--
On 9/9/2021 10:28 PM, ira smilovitz wrote:
The following article supports Alan's position (and contradicts my
earlier thinking) that a non-resident alien's director's compensation
for services performed outside the US would not be taxable to the US.
https://www.dlapiper.com/en/uk/insights/publications/2015/05/global-tax-news-may-2015/international-tax-and-withholding-considerations/
Interesting, though, that this article cites nothing at all in support
any of its positions.
Ira Smilovitz, EA
Leonia, NJ
On Thursday, September 9, 2021 at 7:35:00 PM UTC-4, Alan wrote:
On 9/8/21 7:07 PM, ira smilovitz wrote:
On Tuesday, September 7, 2021 at 11:31:40 AM UTC-4, Stuart O.I don't have a definitive answer either, BUT, I have always interpreted
Bronstein wrote:
I have a question about US source income. On the one hand Publication >>>>> 519 implies that income from a US source is not taxable to aI don't have a definitive answer for you, but here's my thinking on
noncitizen/nonresident whose services are all performed outside the
US.
On the other hand in other places the IRS says that all US source
income for nonresident aliens is subject to tax.
In my case there is the director of a US corporation, who receives
directors fees for services that are all performed outside the US. Is >>>>> that considered US source income? Sorry, but I haven't been able to
fine the answer to that question.
Thanks for any help you can give.
--
Stu
http://DownToEarthLawyer.com
--
the matter. As a corporate director, I would expect that attendance
at board meetings would be required. Attendance via teleconference
would be for the convenience of the director and not for the
necessity of the corporation. Therefore the services would be
performed inside the US, regardless of his physical location. This
differs from the situation where the corporation might hire someone
internationally to perform some service that can be done anywhere or
needs to be done internationally. Of course, my reasoning avoids any
consideration of COVID impacts on the rtax treatment. Also, you need
to consider any tax treaty provisions that might cover this.
Ira Smilovitz, EA
Leonia, NJ
the code (864 and 871) and its accompanying regulations to mean physical >>> presence in the 48 states and the D.C. whenever it says "engaged in a
trade or business in the United States" when dealing with personal
service income. Sitting in front of a terminal in Belgium is no
different then making a telephone call from Belgium. I don't believe
the issue of convenience or necessity enters into the picture.
I just don't see how an NRA can have effectively connected personal
service income without physically being present in the U.S.
--
On 9/10/21 7:57 AM, Taxed and Spent wrote:
On 9/9/2021 10:28 PM, ira smilovitz wrote:Below is what it said. The second paragraph tells you that the US
The following article supports Alan's position (and contradicts my
earlier thinking) that a non-resident alien's director's compensation
for services performed outside the US would not be taxable to the US.
https://www.dlapiper.com/en/uk/insights/publications/2015/05/global-tax-news-may-2015/international-tax-and-withholding-considerations/
Interesting, though, that this article cites nothing at all in support
any of its positions.
Ira Smilovitz, EA
Leonia, NJ
On Thursday, September 9, 2021 at 7:35:00 PM UTC-4, Alan wrote:
On 9/8/21 7:07 PM, ira smilovitz wrote:
On Tuesday, September 7, 2021 at 11:31:40 AM UTC-4, Stuart O.I don't have a definitive answer either, BUT, I have always interpreted >>>> the code (864 and 871) and its accompanying regulations to mean physical >>>> presence in the 48 states and the D.C. whenever it says "engaged in a
Bronstein wrote:
I have a question about US source income. On the one hand Publication >>>>>> 519 implies that income from a US source is not taxable to aI don't have a definitive answer for you, but here's my thinking on
noncitizen/nonresident whose services are all performed outside the >>>>>> US.
On the other hand in other places the IRS says that all US source
income for nonresident aliens is subject to tax.
In my case there is the director of a US corporation, who receives >>>>>> directors fees for services that are all performed outside the US. Is >>>>>> that considered US source income? Sorry, but I haven't been able to >>>>>> fine the answer to that question.
Thanks for any help you can give.
--
Stu
http://DownToEarthLawyer.com
--
the matter. As a corporate director, I would expect that attendance
at board meetings would be required. Attendance via teleconference
would be for the convenience of the director and not for the
necessity of the corporation. Therefore the services would be
performed inside the US, regardless of his physical location. This
differs from the situation where the corporation might hire someone
internationally to perform some service that can be done anywhere or >>>>> needs to be done internationally. Of course, my reasoning avoids any >>>>> consideration of COVID impacts on the rtax treatment. Also, you need >>>>> to consider any tax treaty provisions that might cover this.
Ira Smilovitz, EA
Leonia, NJ
trade or business in the United States" when dealing with personal
service income. Sitting in front of a terminal in Belgium is no
different then making a telephone call from Belgium. I don't believe
the issue of convenience or necessity enters into the picture.
I just don't see how an NRA can have effectively connected personal
service income without physically being present in the U.S.
--
company is not required to withhold income tax. If the payment was
taxable in the US, then the company would have been required to withhold
30% or the treaty amount. ==========================================================
US federal withholding tax considerations
Under US law, directors’ fees a US company pays to a nonresident alien director who performs director services while in the United States are considered US source income that is subject to US federal withholding
tax of 30 percent.
When the same director performs director services for a US company
outside of the United States (such as when a meeting is convened outside
of the United States or he participates by conference call from outside
the country), the portion of fees paid for services performed outside
of the United States are not subject to US federal withholding tax. ===========================================================
On 9/11/2021 1:07 PM, Alan wrote:
On 9/10/21 7:57 AM, Taxed and Spent wrote:
On 9/9/2021 10:28 PM, ira smilovitz wrote:Below is what it said. The second paragraph tells you that the US
The following article supports Alan's position (and contradicts my
earlier thinking) that a non-resident alien's director's compensation
for services performed outside the US would not be taxable to the US.
https://www.dlapiper.com/en/uk/insights/publications/2015/05/global-tax-news-may-2015/international-tax-and-withholding-considerations/
Interesting, though, that this article cites nothing at all in support
any of its positions.
Ira Smilovitz, EA
Leonia, NJ
On Thursday, September 9, 2021 at 7:35:00 PM UTC-4, Alan wrote:
On 9/8/21 7:07 PM, ira smilovitz wrote:
On Tuesday, September 7, 2021 at 11:31:40 AM UTC-4, Stuart O.I don't have a definitive answer either, BUT, I have always
Bronstein wrote:
I have a question about US source income. On the one handI don't have a definitive answer for you, but here's my thinking on >>>>>> the matter. As a corporate director, I would expect that attendance >>>>>> at board meetings would be required. Attendance via teleconference >>>>>> would be for the convenience of the director and not for the
Publication
519 implies that income from a US source is not taxable to a
noncitizen/nonresident whose services are all performed outside the >>>>>>> US.
On the other hand in other places the IRS says that all US source >>>>>>> income for nonresident aliens is subject to tax.
In my case there is the director of a US corporation, who receives >>>>>>> directors fees for services that are all performed outside the
US. Is
that considered US source income? Sorry, but I haven't been able to >>>>>>> fine the answer to that question.
Thanks for any help you can give.
--
Stu
http://DownToEarthLawyer.com
--
necessity of the corporation. Therefore the services would be
performed inside the US, regardless of his physical location. This >>>>>> differs from the situation where the corporation might hire someone >>>>>> internationally to perform some service that can be done anywhere or >>>>>> needs to be done internationally. Of course, my reasoning avoids any >>>>>> consideration of COVID impacts on the rtax treatment. Also, you need >>>>>> to consider any tax treaty provisions that might cover this.
Ira Smilovitz, EA
Leonia, NJ
interpreted
the code (864 and 871) and its accompanying regulations to mean
physical
presence in the 48 states and the D.C. whenever it says "engaged in a >>>>> trade or business in the United States" when dealing with personal
service income. Sitting in front of a terminal in Belgium is no
different then making a telephone call from Belgium. I don't believe >>>>> the issue of convenience or necessity enters into the picture.
I just don't see how an NRA can have effectively connected personal
service income without physically being present in the U.S.
--
company is not required to withhold income tax. If the payment was
taxable in the US, then the company would have been required to withhold
30% or the treaty amount.
==========================================================
US federal withholding tax considerations
Under US law, directors’ fees a US company pays to a nonresident alien
director who performs director services while in the United States are
considered US source income that is subject to US federal withholding
tax of 30 percent.
When the same director performs director services for a US company
outside of the United States (such as when a meeting is convened outside
of the United States or he participates by conference call from outside
the country), the portion of fees paid for services performed outside
of the United States are not subject to US federal withholding tax.
===========================================================
Yes, of course I read that. But their statement comes out of thin air,
not pointing to any supporting document, statute, regulation or
anything. Their statement may be true, or it may just be their position based on nothing at all.
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