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Www State Nm Us Tax

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Www State Nm Us Tax

Www state nm us tax Publication 515 - Main Content Table of Contents Withholding of TaxWithholding Agent Withholding and Reporting Obligations Persons Subject to NRA WithholdingIdentifying the Payee Foreign Persons DocumentationBeneficial Owners Foreign Intermediaries and Foreign Flow-Through Entities Standards of Knowledge Presumption Rules Income Subject to NRA WithholdingSource of Income Fixed or Determinable Annual or Periodical Income (FDAP) Withholding on Specific IncomeEffectively Connected Income Income Not Effectively Connected Pay for Personal Services Performed Artists and Athletes (Income Codes 42 and 43) Other Income Foreign Governments and Certain Other Foreign Organizations U. Www state nm us tax S. Www state nm us tax Taxpayer Identification NumbersUnexpected payment. Www state nm us tax Depositing Withheld TaxesWhen Deposits Are Required Adjustment for Overwithholding Returns RequiredJoint owners. Www state nm us tax Electronic reporting. Www state nm us tax Partnership Withholding on Effectively Connected IncomeWho Must Withhold Foreign Partner Publicly Traded Partnerships U. Www state nm us tax S. Www state nm us tax Real Property InterestForeign corporations. Www state nm us tax Domestic corporations. Www state nm us tax U. Www state nm us tax S. Www state nm us tax real property holding corporations. Www state nm us tax Partnerships. Www state nm us tax Trusts and estates. Www state nm us tax Domestically controlled QIE. Www state nm us tax Late filing of certifications or notices. Www state nm us tax Certifications. Www state nm us tax Liability of agent or qualified substitute. Www state nm us tax Reporting and Paying the Tax Withholding Certificates Tax Treaty TablesTable 1 Table 2 Table 3 How To Get Tax HelpLow Income Taxpayer Clinics (LITCs). Www state nm us tax Withholding of Tax In most cases, a foreign person is subject to U. Www state nm us tax S. Www state nm us tax tax on its U. Www state nm us tax S. Www state nm us tax source income. Www state nm us tax Most types of U. Www state nm us tax S. Www state nm us tax source income received by a foreign person are subject to U. Www state nm us tax S. Www state nm us tax tax of 30%. Www state nm us tax A reduced rate, including exemption, may apply if there is a tax treaty between the foreign person's country of residence and the United States. Www state nm us tax The tax is generally withheld (NRA withholding) from the payment made to the foreign person. Www state nm us tax The term “NRA withholding” is used in this publication descriptively to refer to withholding required under sections 1441, 1442, and 1443 of the Internal Revenue Code. Www state nm us tax In most cases, NRA withholding describes the withholding regime that requires withholding on a payment of U. Www state nm us tax S. Www state nm us tax source income. Www state nm us tax Payments to foreign persons, including nonresident alien individuals, foreign entities, and governments, may be subject to NRA withholding. Www state nm us tax NRA withholding does not include withholding under section 1445 of the Code (see U. Www state nm us tax S. Www state nm us tax Real Property Interest, later) or under section 1446 of the Code (see Partnership Withholding on Effectively Connected Income , later). Www state nm us tax A withholding agent (defined next) is the person responsible for withholding on payments made to a foreign person. Www state nm us tax However, a withholding agent that can reliably associate the payment with documentation (discussed later) from a U. Www state nm us tax S. Www state nm us tax person is not required to withhold. Www state nm us tax In addition, a withholding agent may apply a reduced rate of withholding (including an exemption from withholding) if it can reliably associate the payment with documentation from a beneficial owner that is a foreign person entitled to a reduced rate of withholding. Www state nm us tax Withholding Agent You are a withholding agent if you are a U. Www state nm us tax S. Www state nm us tax or foreign person that has control, receipt, custody, disposal, or payment of any item of income of a foreign person that is subject to withholding. Www state nm us tax A withholding agent may be an individual, corporation, partnership, trust, association, nominee (under section 1446 of the Code), or any other entity, including any foreign intermediary, foreign partnership, or U. Www state nm us tax S. Www state nm us tax branch of certain foreign banks and insurance companies. Www state nm us tax You may be a withholding agent even if there is no requirement to withhold from a payment or even if another person has withheld the required amount from the payment. Www state nm us tax Although several persons may be withholding agents for a single payment, the full tax is required to be withheld only once. Www state nm us tax In most cases, the U. Www state nm us tax S. Www state nm us tax person who pays an amount subject to NRA withholding is the person responsible for withholding. Www state nm us tax However, other persons may be required to withhold. Www state nm us tax For example, a payment made by a flow-through entity or nonqualified intermediary that knows, or has reason to know, that the full amount of NRA withholding was not done by the person from which it receives a payment is required to do the appropriate withholding since it also falls within the definition of a withholding agent. Www state nm us tax In addition, withholding must be done by any qualified intermediary, withholding foreign partnership, or withholding foreign trust in accordance with the terms of its withholding agreement, discussed later. Www state nm us tax Liability for tax. Www state nm us tax   As a withholding agent, you are personally liable for any tax required to be withheld. Www state nm us tax This liability is independent of the tax liability of the foreign person to whom the payment is made. Www state nm us tax If you fail to withhold and the foreign payee fails to satisfy its U. Www state nm us tax S. Www state nm us tax tax liability, then both you and the foreign person are liable for tax, as well as interest and any applicable penalties. Www state nm us tax   The applicable tax will be collected only once. Www state nm us tax If the foreign person satisfies its U. Www state nm us tax S. Www state nm us tax tax liability, you are not liable for the tax but remain liable for any interest and penalties for failure to withhold. Www state nm us tax Determination of amount to withhold. Www state nm us tax   You must withhold on the gross amount subject to NRA withholding. Www state nm us tax You cannot reduce the gross amount by any deductions. Www state nm us tax However, see Scholarships and Fellowship Grants and Pay for Personal Services Performed , later, for when a deduction for a personal exemption may be allowed. Www state nm us tax   If the determination of the source of the income or the amount subject to tax depends on facts that are not known at the time of payment, you must withhold an amount sufficient to ensure that at least 30% of the amount subsequently determined to be subject to withholding is withheld. Www state nm us tax In no case, however, should you withhold more than 30% of the total amount paid. Www state nm us tax Or, you may make a reasonable estimate of the amount from U. Www state nm us tax S. Www state nm us tax sources and put a corresponding part of the amount due in escrow until the amount from U. Www state nm us tax S. Www state nm us tax sources can be determined, at which time withholding becomes due. Www state nm us tax When to withhold. Www state nm us tax   Withholding is required at the time you make a payment of an amount subject to withholding. Www state nm us tax A payment is made to a person if that person realizes income, whether or not there is an actual transfer of cash or other property. Www state nm us tax A payment is considered made to a person if it is paid for that person's benefit. Www state nm us tax For example, a payment made to a creditor of a person in satisfaction of that person's debt to the creditor is considered made to the person. Www state nm us tax A payment also is considered made to a person if it is made to that person's agent. Www state nm us tax   A U. Www state nm us tax S. Www state nm us tax partnership should withhold when any distributions that include amounts subject to withholding are made. Www state nm us tax However, if a foreign partner's distributive share of income subject to withholding is not actually distributed, the U. Www state nm us tax S. Www state nm us tax partnership must withhold on the foreign partner's distributive share of the income on the earlier of the date that a Schedule K-1 (Form 1065) is provided or mailed to the partner or the due date for furnishing that schedule. Www state nm us tax If the distributable amount consists of effectively connected income, see Partnership Withholding on Effectively Connected Income , later. Www state nm us tax A U. Www state nm us tax S. Www state nm us tax trust is required to withhold on the amount includible in the gross income of a foreign beneficiary to the extent the trust's distributable net income consists of an amount subject to withholding. Www state nm us tax To the extent a U. Www state nm us tax S. Www state nm us tax trust is required to distribute an amount subject to withholding but does not actually distribute the amount, it must withhold on the foreign beneficiary's allocable share at the time the income is required to be reported on Form 1042-S. Www state nm us tax Withholding and Reporting Obligations You are required to report payments subject to NRA withholding on Form 1042-S and to file a tax return on Form 1042. Www state nm us tax (See Returns Required , later. Www state nm us tax ) An exception from reporting may apply to individuals who are not required to withhold from a payment and who do not make the payment in the course of their trade or business. Www state nm us tax Form 1099 reporting and backup withholding. Www state nm us tax    You also may be responsible as a payer for reporting on Form 1099 payments made to a U. Www state nm us tax S. Www state nm us tax person. Www state nm us tax You must withhold 28% (backup withholding rate) from a reportable payment made to a U. Www state nm us tax S. Www state nm us tax person that is subject to Form 1099 reporting if any of the following apply. Www state nm us tax The U. Www state nm us tax S. Www state nm us tax person has not provided its taxpayer identification number (TIN) in the manner required. Www state nm us tax The IRS notifies you that the TIN furnished by the payee is incorrect. Www state nm us tax There has been a notified payee underreporting. Www state nm us tax There has been a payee certification failure. Www state nm us tax In most cases, a TIN must be provided by a U. Www state nm us tax S. Www state nm us tax non-exempt recipient on Form W-9, Request for Taxpayer Identification Number and Certification. Www state nm us tax A payer files a tax return on Form 945, Annual Return of Withheld Federal Income Tax, for backup withholding. Www state nm us tax You may be required to file Form 1099 and, if appropriate, backup withhold, even if you do not make the payments directly to that U. Www state nm us tax S. Www state nm us tax person. Www state nm us tax For example, you are required to report income paid to a foreign intermediary or flow-through entity that collects for a U. Www state nm us tax S. Www state nm us tax person subject to Form 1099 reporting. Www state nm us tax See Identifying the Payee , later, for more information. Www state nm us tax Also see Section S. Www state nm us tax Special Rules for Reporting Payments Made Through Foreign Intermediaries and Foreign Flow-Through Entities on Form 1099 in the General Instructions for Certain Information Returns. Www state nm us tax Foreign persons who provide Form W-8BEN, Form W-8ECI, or Form W-8EXP (or applicable documentary evidence) are exempt from backup withholding and Form 1099 reporting. Www state nm us tax Wages paid to employees. Www state nm us tax   If you are the employer of a nonresident alien, you generally must withhold taxes at graduated rates. Www state nm us tax See Pay for Personal Services Performed , later. Www state nm us tax Effectively connected income by partnerships. Www state nm us tax   A withholding agent that is a partnership (whether U. Www state nm us tax S. Www state nm us tax or foreign) is also responsible for withholding on its income effectively connected with a U. Www state nm us tax S. Www state nm us tax trade or business that is allocable to foreign partners. Www state nm us tax See Partnership Withholding on Effectively Connected Income , later, for more information. Www state nm us tax U. Www state nm us tax S. Www state nm us tax real property interest. Www state nm us tax   A withholding agent also may be responsible for withholding if a foreign person transfers a U. Www state nm us tax S. Www state nm us tax real property interest to the agent, or if it is a corporation, partnership, trust, or estate that distributes a U. Www state nm us tax S. Www state nm us tax real property interest to a shareholder, partner, or beneficiary that is a foreign person. Www state nm us tax See U. Www state nm us tax S. Www state nm us tax Real Property Interest , later. Www state nm us tax Persons Subject to NRA Withholding NRA withholding applies only to payments made to a payee that is a foreign person. Www state nm us tax It does not apply to payments made to U. Www state nm us tax S. Www state nm us tax persons. Www state nm us tax Usually, you determine the payee's status as a U. Www state nm us tax S. Www state nm us tax or foreign person based on the documentation that person provides. Www state nm us tax See Documentation , later. Www state nm us tax However, if you have received no documentation or you cannot reliably associate all or a part of a payment with documentation, then you must apply certain presumption rules, discussed later. Www state nm us tax Identifying the Payee In most cases, the payee is the person to whom you make the payment, regardless of whether that person is the beneficial owner of the income. Www state nm us tax However, there are situations in which the payee is a person other than the one to whom you actually make a payment. Www state nm us tax U. Www state nm us tax S. Www state nm us tax agent of foreign person. Www state nm us tax   If you make a payment to a U. Www state nm us tax S. Www state nm us tax person and you have actual knowledge that the U. Www state nm us tax S. Www state nm us tax person is receiving the payment as an agent of a foreign person, you must treat the payment as made to the foreign person. Www state nm us tax However, if the U. Www state nm us tax S. Www state nm us tax person is a financial institution, you may treat the institution as the payee provided you have no reason to believe that the institution will not comply with its own obligation to withhold. Www state nm us tax   If the payment is not subject to NRA withholding (for example, gross proceeds from the sales of securities), you must treat the payment as made to a U. Www state nm us tax S. Www state nm us tax person and not as a payment to a foreign person. Www state nm us tax You may be required to report the payment on Form 1099 and, if applicable, backup withhold. Www state nm us tax Disregarded entities. Www state nm us tax   A business entity that is not a corporation and that has a single owner may be disregarded as an entity separate from its owner (a disregarded entity) for federal tax purposes. Www state nm us tax The payee of a payment made to a disregarded entity is the owner of the entity. Www state nm us tax   If the owner of the entity is a foreign person, you must apply NRA withholding unless you can treat the foreign owner as a beneficial owner entitled to a reduced rate of withholding. Www state nm us tax   If the owner is a U. Www state nm us tax S. Www state nm us tax person, you do not apply NRA withholding. Www state nm us tax However, you may be required to report the payment on Form 1099 and, if applicable, backup withhold. Www state nm us tax You may assume that a foreign entity is not a disregarded entity unless you can reliably associate the payment with documentation provided by the owner or you have actual knowledge or reason to know that the foreign entity is a disregarded entity. Www state nm us tax Flow-Through Entities The payees of payments (other than income effectively connected with a U. Www state nm us tax S. Www state nm us tax trade or business) made to a foreign flow-through entity are the owners or beneficiaries of the flow-through entity. Www state nm us tax This rule applies for purposes of NRA withholding and for Form 1099 reporting and backup withholding. Www state nm us tax Income that is, or is deemed to be, effectively connected with the conduct of a U. Www state nm us tax S. Www state nm us tax trade or business of a flow-through entity is treated as paid to the entity. Www state nm us tax All of the following are flow-through entities. Www state nm us tax A foreign partnership (other than a withholding foreign partnership). Www state nm us tax A foreign simple or foreign grantor trust (other than a withholding foreign trust). Www state nm us tax A fiscally transparent entity receiving income for which treaty benefits are claimed. Www state nm us tax See Fiscally transparent entity , later. Www state nm us tax In most cases, you treat a payee as a flow-through entity if it provides you with a Form W-8IMY (see Documentation , later) on which it claims such status. Www state nm us tax You also may be required to treat the entity as a flow-through entity under the presumption rules, discussed later. Www state nm us tax You must determine whether the owners or beneficiaries of a flow-through entity are U. Www state nm us tax S. Www state nm us tax or foreign persons, how much of the payment relates to each owner or beneficiary, and, if the owner or beneficiary is foreign, whether a reduced rate of NRA withholding applies. Www state nm us tax You make these determinations based on the documentation and other information (contained in a withholding statement) that is associated with the flow-through entity's Form W-8IMY. Www state nm us tax If you do not have all of the information that is required to reliably associate a payment with a specific payee, you must apply the presumption rules. Www state nm us tax See Documentation and Presumption Rules , later. Www state nm us tax Withholding foreign partnerships and withholding foreign trusts are not flow-through entities. Www state nm us tax Foreign partnerships. Www state nm us tax    A foreign partnership is any partnership that is not organized under the laws of any state of the United States or the District of Columbia or any partnership that is treated as foreign under the income tax regulations. Www state nm us tax If a foreign partnership is not a withholding foreign partnership, the payees of income are the partners of the partnership, provided the partners are not themselves a flow-through entity or a foreign intermediary. Www state nm us tax However, the payee is the partnership itself if the partnership is claiming treaty benefits on the basis that it is not fiscally transparent and that it meets all the other requirements for claiming treaty benefits. Www state nm us tax If a partner is a foreign flow-through entity or a foreign intermediary, you apply the payee determination rules to that partner to determine the payees. Www state nm us tax Example 1. Www state nm us tax A nonwithholding foreign partnership has three partners: a nonresident alien individual; a foreign corporation; and a U. Www state nm us tax S. Www state nm us tax citizen. Www state nm us tax You make a payment of U. Www state nm us tax S. Www state nm us tax source interest to the partnership. Www state nm us tax It gives you a Form W-8IMY with which it associates Form W-8BEN from the nonresident alien; Form W-8BEN from the foreign corporation; and Form W-9 from the U. Www state nm us tax S. Www state nm us tax citizen. Www state nm us tax The partnership also gives you a complete withholding statement that enables you to associate a part of the interest payment to each partner. Www state nm us tax You must treat all three partners as the payees of the interest payment as if the payment were made directly to them. Www state nm us tax Report the payment to the nonresident alien and the foreign corporation on Forms 1042-S. Www state nm us tax Report the payment to the U. Www state nm us tax S. Www state nm us tax citizen on Form 1099-INT. Www state nm us tax Example 2. Www state nm us tax A nonwithholding foreign partnership has two partners: a foreign corporation and a nonwithholding foreign partnership. Www state nm us tax The second partnership has two partners, both nonresident alien individuals. Www state nm us tax You make a payment of U. Www state nm us tax S. Www state nm us tax source interest to the first partnership. Www state nm us tax It gives you a valid Form W-8IMY with which it associates a Form W-8BEN from the foreign corporation and a Form W-8IMY from the second partnership. Www state nm us tax In addition, Forms W-8BEN from the partners are associated with the Form W-8IMY from the second partnership. Www state nm us tax The Forms W-8IMY from the partnerships have complete withholding statements associated with them. Www state nm us tax Because you can reliably associate a part of the interest payment with the Form W-8BEN provided by the foreign corporation and the Forms W-8BEN provided by the nonresident alien individual partners as a result of the withholding statements, you must treat them as the payees of the interest. Www state nm us tax Example 3. Www state nm us tax You make a payment of U. Www state nm us tax S. Www state nm us tax source dividends to a withholding foreign partnership. Www state nm us tax The partnership has two partners, both foreign corporations. Www state nm us tax You can reliably associate the payment with a valid Form W-8IMY from the partnership on which it represents that it is a withholding foreign partnership. Www state nm us tax You must treat the partnership as the payee of the dividends. Www state nm us tax Foreign simple and grantor trust. Www state nm us tax   A trust is foreign unless it meets both of the following tests. Www state nm us tax A court within the United States is able to exercise primary supervision over the administration of the trust. Www state nm us tax One or more U. Www state nm us tax S. Www state nm us tax persons have the authority to control all substantial decisions of the trust. Www state nm us tax   In most cases, a foreign simple trust is a foreign trust that is required to distribute all of its income annually. Www state nm us tax A foreign grantor trust is a foreign trust that is treated as a grantor trust under sections 671 through 679 of the Code. Www state nm us tax   The payees of a payment made to a foreign simple trust are the beneficiaries of the trust. Www state nm us tax The payees of a payment made to a foreign grantor trust are the owners of the trust. Www state nm us tax However, the payee is the foreign simple or grantor trust itself if the trust is claiming treaty benefits on the basis that it is not fiscally transparent and that it meets all the other requirements for claiming treaty benefits. Www state nm us tax If the beneficiaries or owners are themselves flow-through entities or foreign intermediaries, you apply the payee determination rules to that beneficiary or owner to determine the payees. Www state nm us tax Example. Www state nm us tax A foreign simple trust has three beneficiaries: two nonresident alien individuals and a U. Www state nm us tax S. Www state nm us tax citizen. Www state nm us tax You make a payment of interest to the foreign trust. Www state nm us tax It gives you a Form W-8IMY with which it associates Forms W-8BEN from the nonresident aliens and a Form W-9 from the U. Www state nm us tax S. Www state nm us tax citizen. Www state nm us tax The trust also gives you a complete withholding statement that enables you to associate a part of the interest payment with the forms provided by each beneficiary. Www state nm us tax You must treat all three beneficiaries as the payees of the interest payment as if the payment were made directly to them. Www state nm us tax Report the payment to the nonresident aliens on Forms 1042-S. Www state nm us tax Report the payment to the U. Www state nm us tax S. Www state nm us tax citizen on Form 1099-INT. Www state nm us tax Fiscally transparent entity. Www state nm us tax   If a reduced rate of withholding under an income tax treaty is claimed, a flow-through entity includes any entity in which the interest holder must treat the entity as fiscally transparent. Www state nm us tax The determination of whether an entity is fiscally transparent is made on an item of income basis (that is, the determination is made separately for interest, dividends, royalties, etc. Www state nm us tax ). Www state nm us tax The interest holder in an entity makes the determination by applying the laws of the jurisdiction where the interest holder is organized, incorporated, or otherwise considered a resident. Www state nm us tax An entity is considered to be fiscally transparent for the income to the extent the laws of that jurisdiction require the interest holder to separately take into account on a current basis the interest holder's share of the income, whether or not distributed to the interest holder, and the character and source of the income to the interest holder are determined as if the income was realized directly from the source that paid it to the entity. Www state nm us tax Subject to the standards of knowledge rules discussed later, you generally make the determination that an entity is fiscally transparent based on a Form W-8IMY provided by the entity. Www state nm us tax   The payees of a payment made to a fiscally transparent entity are the interest holders of the entity. Www state nm us tax Example. Www state nm us tax Entity A is a business organization organized under the laws of country X that has an income tax treaty in force with the United States. Www state nm us tax A has two interest holders, B and C. Www state nm us tax B is a corporation organized under the laws of country Y. Www state nm us tax C is a corporation organized under the laws of country Z. Www state nm us tax Both countries Y and Z have an income tax treaty in force with the United States. Www state nm us tax A receives royalty income from U. Www state nm us tax S. Www state nm us tax sources that is not effectively connected with the conduct of a trade or business in the United States. Www state nm us tax For U. Www state nm us tax S. Www state nm us tax income tax purposes, A is treated as a partnership. Www state nm us tax Country X treats A as a partnership and requires the interest holders in A to separately take into account on a current basis their respective shares of the income paid to A even if the income is not distributed. Www state nm us tax The laws of country X provide that the character and source of the income to A's interest holders are determined as if the income was realized directly from the source that paid it to A. Www state nm us tax Accordingly, A is fiscally transparent in its jurisdiction, country X. Www state nm us tax B and C are not fiscally transparent under the laws of their respective countries of incorporation. Www state nm us tax Country Y requires B to separately take into account on a current basis B's share of the income paid to A, and the character and source of the income to B is determined as if the income was realized directly from the source that paid it to A. Www state nm us tax Accordingly, A is fiscally transparent for that income under the laws of country Y, and B is treated as deriving its share of the U. Www state nm us tax S. Www state nm us tax source royalty income for purposes of the U. Www state nm us tax S. Www state nm us tax -Y income tax treaty. Www state nm us tax Country Z, on the other hand, treats A as a corporation and does not require C to take into account its share of A's income on a current basis whether or not distributed. Www state nm us tax Therefore, A is not treated as fiscally transparent under the laws of country Z. Www state nm us tax Accordingly, C is not treated as deriving its share of the U. Www state nm us tax S. Www state nm us tax source royalty income for purposes of the U. Www state nm us tax S. Www state nm us tax -Z income tax treaty. Www state nm us tax Foreign Intermediaries In most cases, if you make payments to a foreign intermediary, the payees are the persons for whom the foreign intermediary collects the payment, such as account holders or customers, not the intermediary itself. Www state nm us tax This rule applies for purposes of NRA withholding and for Form 1099 reporting and backup withholding. Www state nm us tax You may, however, treat a qualified intermediary that has assumed primary withholding responsibility for a payment as the payee, and you are not required to withhold. Www state nm us tax An intermediary is a custodian, broker, nominee, or any other person that acts as an agent for another person. Www state nm us tax A foreign intermediary is either a qualified intermediary or a nonqualified intermediary. Www state nm us tax In most cases, you determine whether an entity is a qualified intermediary or a nonqualified intermediary based on the representations the intermediary makes on Form W-8IMY. Www state nm us tax You must determine whether the customers or account holders of a foreign intermediary are U. Www state nm us tax S. Www state nm us tax or foreign persons and, if the account holder or customer is foreign, whether a reduced rate of NRA withholding applies. Www state nm us tax You make these determinations based on the foreign intermediary's Form W-8IMY and associated information and documentation. Www state nm us tax If you do not have all of the information or documentation that is required to reliably associate a payment with a payee, you must apply the presumption rules. Www state nm us tax See Documentation and Presumption Rules , later. Www state nm us tax Nonqualified intermediary. Www state nm us tax   A nonqualified intermediary (NQI) is any intermediary that is a foreign person and that is not a qualified intermediary. Www state nm us tax The payees of a payment made to an NQI are the customers or account holders on whose behalf the NQI is acting. Www state nm us tax Example. Www state nm us tax You make a payment of interest to a foreign bank that is a nonqualified intermediary. Www state nm us tax The bank gives you a Form W-8IMY and the Forms W-8BEN of two foreign persons, and a Form W-9 from a U. Www state nm us tax S. Www state nm us tax person for whom the bank is collecting the payments. Www state nm us tax The bank also associates with its Form W-8IMY a withholding statement on which it allocates the interest payment to each account holder and provides all other information required to be on the withholding statement. Www state nm us tax The account holders are the payees of the interest payment. Www state nm us tax You should report the part of the interest paid to the two foreign persons on Forms 1042-S and the part paid to the U. Www state nm us tax S. Www state nm us tax person on Form 1099-INT. Www state nm us tax Qualified intermediary. Www state nm us tax   A qualified intermediary (QI) is any foreign intermediary (or foreign branch of a U. Www state nm us tax S. Www state nm us tax intermediary) that has entered into a qualified intermediary withholding agreement (discussed later) with the IRS. Www state nm us tax You may treat a QI as a payee to the extent the QI assumes primary withholding responsibility or primary Form 1099 reporting and backup withholding responsibility for a payment. Www state nm us tax In this situation, the QI is required to withhold the tax. Www state nm us tax You can determine whether a QI has assumed responsibility from the Form W-8IMY provided by the QI. Www state nm us tax   A payment to a QI to the extent it does not assume primary NRA withholding responsibility is considered made to the person on whose behalf the QI acts. Www state nm us tax If a QI does not assume Form 1099 reporting and backup withholding responsibility, you must report on Form 1099 and, if applicable, backup withhold as if you were making the payment directly to the U. Www state nm us tax S. Www state nm us tax person. Www state nm us tax Branches of financial institutions. Www state nm us tax   Branches of financial institutions are not permitted to operate as QIs if they are located outside of countries having approved “know-your-customer” (KYC) rules. Www state nm us tax The countries with approved KYC rules are listed on IRS. Www state nm us tax gov. Www state nm us tax QI withholding agreement. Www state nm us tax   Foreign financial institutions and foreign branches of U. Www state nm us tax S. Www state nm us tax financial institutions can enter into an agreement with the IRS to be a qualified intermediary. Www state nm us tax   A QI is entitled to certain simplified withholding and reporting rules. Www state nm us tax In general, there are three major areas whereby intermediaries with QI status are afforded such simplified treatment. Www state nm us tax   To apply for QI status, complete Form 14345, Qualified Intermediary Application, and Form SS-4, Application for Employer Identification Number. Www state nm us tax These forms, and the procedures required to obtain a QI withholding agreement are available at www. Www state nm us tax irs. Www state nm us tax gov/Businesses/Corporations/Qualified-Intermediaries-(QI). Www state nm us tax Documentation. Www state nm us tax   A QI is not required to forward documentation obtained from foreign account holders to the U. Www state nm us tax S. Www state nm us tax withholding agent from whom the QI receives a payment of U. Www state nm us tax S. Www state nm us tax source income. Www state nm us tax The QI maintains such documentation at its location and provides the U. Www state nm us tax S. Www state nm us tax withholding agent with withholding rate pools. Www state nm us tax A withholding rate pool is a payment of a single type of income that is subject to a single rate of withholding. Www state nm us tax   A QI is required to provide the U. Www state nm us tax S. Www state nm us tax withholding agent with information regarding U. Www state nm us tax S. Www state nm us tax persons subject to Form 1099 information reporting unless the QI assumes the primary obligation to do Form 1099 reporting and backup withholding. Www state nm us tax   If a QI obtains documentary evidence under the “know-your-customer” rules that apply to the QI under local law, and the documentary evidence is of a type specified in an attachment to the QI agreement, the documentary evidence remains valid until there is a change in circumstances or the QI knows the information is incorrect. Www state nm us tax This indefinite validity period rule does not apply to Forms W-8 or to documentary evidence that is not of the type specified in the attachment to the agreement. Www state nm us tax Form 1042-S reporting. Www state nm us tax   A QI is permitted to report payments made to its direct foreign account holders on a pooled basis rather than reporting payments to each direct account holder specifically. Www state nm us tax Pooled basis reporting is not available for payments to certain account holders, such as a nonqualified intermediary or a flow-through entity (discussed earlier). Www state nm us tax Collective refund procedures. Www state nm us tax   A QI may seek a refund on behalf of its direct account holders. Www state nm us tax The direct account holders, therefore, are not required to file returns with the IRS to obtain refunds, but rather may obtain them from the QI. Www state nm us tax U. Www state nm us tax S. Www state nm us tax branches of foreign banks and foreign insurance companies. Www state nm us tax   Special rules apply to a U. Www state nm us tax S. Www state nm us tax branch of a foreign bank subject to Federal Reserve Board supervision or a foreign insurance company subject to state regulatory supervision. Www state nm us tax If you agree to treat the branch as a U. Www state nm us tax S. Www state nm us tax person, you may treat the branch as a U. Www state nm us tax S. Www state nm us tax payee for a payment subject to NRA withholding provided you receive a Form W-8IMY from the U. Www state nm us tax S. Www state nm us tax branch on which the agreement is evidenced. Www state nm us tax If you treat the branch as a U. Www state nm us tax S. Www state nm us tax payee, you are not required to withhold. Www state nm us tax Even though you agree to treat the branch as a U. Www state nm us tax S. Www state nm us tax person, you must report the payment on Form 1042-S. Www state nm us tax   A financial institution organized in a U. Www state nm us tax S. Www state nm us tax possession is treated as a U. Www state nm us tax S. Www state nm us tax branch. Www state nm us tax The special rules discussed in this section apply to a possessions financial institution. Www state nm us tax   If you are paying a U. Www state nm us tax S. Www state nm us tax branch an amount that is not subject to NRA withholding, treat the payment as made to a foreign person, irrespective of any agreement to treat the branch as a U. Www state nm us tax S. Www state nm us tax person for amounts subject to NRA withholding. Www state nm us tax Consequently, amounts not subject to NRA withholding that are paid to a U. Www state nm us tax S. Www state nm us tax branch are not subject to Form 1099 reporting or backup withholding. Www state nm us tax   Alternatively, a U. Www state nm us tax S. Www state nm us tax branch may provide you with a Form W-8IMY with which it associates the documentation of the persons on whose behalf it acts. Www state nm us tax In this situation, the payees are the persons on whose behalf the branch acts provided you can reliably associate the payment with valid documentation from those persons. Www state nm us tax See Nonqualified Intermediaries under  Documentation, later. Www state nm us tax   If the U. Www state nm us tax S. Www state nm us tax branch does not provide you with a Form W-8IMY, then you should treat a payment subject to NRA withholding as made to the foreign person of which the branch is a part and the income as effectively connected with the conduct of a trade or business in the United States. Www state nm us tax Withholding foreign partnership and foreign trust. Www state nm us tax   A withholding foreign partnership (WP) is any foreign partnership that has entered into a WP withholding agreement with the IRS and is acting in that capacity. Www state nm us tax A withholding foreign trust (WT) is a foreign simple or grantor trust that has entered into a WT withholding agreement with the IRS and is acting in that capacity. Www state nm us tax   A WP or WT may act in that capacity only for payments of amounts subject to NRA withholding that are distributed to, or included in the distributive share of, its direct partners, beneficiaries, or owners. Www state nm us tax A WP or WT acting in that capacity must assume NRA withholding responsibility for these amounts. Www state nm us tax You may treat a WP or WT as a payee if it has provided you with documentation (discussed later) that represents that it is acting as a WP or WT for such amounts. Www state nm us tax WP and WT withholding agreements. Www state nm us tax   The WP and WT withholding agreements and the application procedures for the agreements are in Revenue Procedure 2003-64. Www state nm us tax Also see the following items. Www state nm us tax Revenue Procedure 2004-21. Www state nm us tax Revenue Procedure 2005-77. Www state nm us tax Employer identification number (EIN). Www state nm us tax   A completed Form SS-4 must be submitted with the application for being a WP or WT. Www state nm us tax The WP or WT will be assigned a WP-EIN or WT-EIN to be used only when acting in that capacity. Www state nm us tax Documentation. Www state nm us tax   A WP or WT must provide you with a Form W-8IMY that certifies that the WP or WT is acting in that capacity and a written statement identifying the amounts for which it is so acting. Www state nm us tax The statement is not required to contain withholding rate pool information or any information relating to the identity of a direct partner, beneficiary, or owner. Www state nm us tax The Form W-8IMY must contain the WP-EIN or WT-EIN. Www state nm us tax Foreign Persons A payee is subject to NRA withholding only if it is a foreign person. Www state nm us tax A foreign person includes a nonresident alien individual, foreign corporation, foreign partnership, foreign trust, foreign estate, and any other person that is not a U. Www state nm us tax S. Www state nm us tax person. Www state nm us tax It also includes a foreign branch of a U. Www state nm us tax S. Www state nm us tax financial institution if the foreign branch is a qualified intermediary. Www state nm us tax In most cases, the U. Www state nm us tax S. Www state nm us tax branch of a foreign corporation or partnership is treated as a foreign person. Www state nm us tax Nonresident alien. Www state nm us tax   A nonresident alien is an individual who is not a U. Www state nm us tax S. Www state nm us tax citizen or a resident alien. Www state nm us tax A resident of a foreign country under the residence article of an income tax treaty is a nonresident alien individual for purposes of withholding. Www state nm us tax Married to U. Www state nm us tax S. Www state nm us tax citizen or resident alien. Www state nm us tax   Nonresident alien individuals married to U. Www state nm us tax S. Www state nm us tax citizens or resident aliens may choose to be treated as resident aliens for certain income tax purposes. Www state nm us tax However, these individuals are still subject to the NRA withholding rules that apply to nonresident aliens for all income except wages. Www state nm us tax Wages paid to these individuals are subject to graduated withholding. Www state nm us tax See Wages Paid to Employees—Graduated Withholding . Www state nm us tax Resident alien. Www state nm us tax   A resident alien is an individual who is not a citizen or national of the United States and who meets either the green card test or the substantial presence test for the calendar year. Www state nm us tax Green card test. Www state nm us tax An alien is a resident alien if the individual was a lawful permanent resident of the United States at any time during the calendar year. Www state nm us tax This is known as the green card test because these aliens hold immigrant visas (also known as green cards). Www state nm us tax Substantial presence test. Www state nm us tax An alien is considered a resident alien if the individual meets the substantial presence test for the calendar year. Www state nm us tax Under this test, the individual must be physically present in the United States on at least: 31 days during the current calendar year, and 183 days during the current year and the 2 preceding years, counting all the days of physical presence in the current year, but only 1/3 the number of days of presence in the first preceding year, and only 1/6 the number of days in the second preceding year. Www state nm us tax   In most cases, the days the alien is in the United States as a teacher, student, or trainee on an “F,” “J,” “M,” or “Q” visa are not counted. Www state nm us tax This exception is for a limited period of time. Www state nm us tax   For more information on resident and nonresident status, the tests for residence, and the exceptions to them, see Publication 519. Www state nm us tax Note. Www state nm us tax   If your employee is late in notifying you that his or her status changed from nonresident alien to resident alien, you may have to make an adjustment to Form 941 if that employee was exempt from withholding of social security and Medicare taxes as a nonresident alien. Www state nm us tax For more information on making adjustments, see chapter 13 of Publication 15 (Circular E). Www state nm us tax Resident of a U. Www state nm us tax S. Www state nm us tax possession. Www state nm us tax   A bona fide resident of Puerto Rico, the U. Www state nm us tax S. Www state nm us tax Virgin Islands, Guam, the Commonwealth of the Northern Mariana Islands (CNMI), or American Samoa who is not a U. Www state nm us tax S. Www state nm us tax citizen or a U. Www state nm us tax S. Www state nm us tax national is treated as a nonresident alien for the withholding rules explained here. Www state nm us tax A bona fide resident of a possession is someone who: Meets the presence test, Does not have a tax home outside the possession, and Does not have a closer connection to the United States or to a foreign country than to the possession. Www state nm us tax   For more information, see Publication 570, Tax Guide for Individuals With Income From U. Www state nm us tax S. Www state nm us tax Possessions. Www state nm us tax Foreign corporations. Www state nm us tax   A foreign corporation is one that does not fit the definition of a domestic corporation. Www state nm us tax A domestic corporation is one that was created or organized in the United States or under the laws of the United States, any of its states, or the District of Columbia. Www state nm us tax Guam or Northern Mariana Islands corporations. Www state nm us tax   A corporation created or organized in, or under the laws of, Guam or the CNMI is not considered a foreign corporation for the purpose of withholding tax for the tax year if: At all times during the tax year less than 25% in value of the corporation's stock is owned, directly or indirectly, by foreign persons; and At least 20% of the corporation's gross income is derived from sources within Guam or the CNMI for the 3-year period ending with the close of the preceding tax year of the corporation (or the period the corporation has been in existence, if less). Www state nm us tax Note. Www state nm us tax   The provisions discussed below under U. Www state nm us tax S. Www state nm us tax Virgin Islands and American Samoa corporations will apply to Guam or CNMI corporations when an implementing agreement is in effect between the United States and that possession. Www state nm us tax U. Www state nm us tax S. Www state nm us tax Virgin Islands and American Samoa corporations. Www state nm us tax   A corporation created or organized in, or under the laws of, the U. Www state nm us tax S. Www state nm us tax Virgin Islands or American Samoa is not considered a foreign corporation for the purposes of withholding tax for the tax year if: At all times during the tax year less than 25% in value of the corporation's stock is owned, directly or indirectly, by foreign persons, At least 65% of the corporation's gross income is effectively connected with the conduct of a trade or business in the U. Www state nm us tax S. Www state nm us tax Virgin Islands, American Samoa, Guam, the CNMI, or the United States for the 3-year period ending with the close of the tax year of the corporation (or the period the corporation or any predecessor has been in existence, if less), and No substantial part of the income of the corporation is used, directly or indirectly, to satisfy obligations to a person who is not a bona fide resident of the U. Www state nm us tax S. Www state nm us tax Virgin Islands, American Samoa, Guam, the CNMI, or the United States. Www state nm us tax Foreign private foundations. Www state nm us tax   A private foundation that was created or organized under the laws of a foreign country is a foreign private foundation. Www state nm us tax 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. Www state nm us tax Other foreign organizations, associations, and charitable institutions. Www state nm us tax   An organization may be exempt from income tax under section 501(a) of the Internal Revenue Code even if it was formed under foreign law. Www state nm us tax In most cases, you do not have to withhold tax on payments of income to these foreign tax-exempt organizations unless the IRS has determined that they are foreign private foundations. Www state nm us tax   Payments to these organizations, however, must be reported on Form 1042-S, even though no tax is withheld. Www state nm us tax   You must withhold tax on the unrelated business income (as described in Publication 598, Tax on Unrelated Business Income of Exempt Organizations) of foreign tax-exempt organizations in the same way that you would withhold tax on similar income of nonexempt organizations. Www state nm us tax U. Www state nm us tax S. Www state nm us tax branches of foreign persons. Www state nm us tax   In most cases, a payment to a U. Www state nm us tax S. Www state nm us tax branch of a foreign person is a payment made to the foreign person. Www state nm us tax However, you may treat payments to U. Www state nm us tax S. Www state nm us tax branches of foreign banks and foreign insurance companies (discussed earlier) that are subject to U. Www state nm us tax S. Www state nm us tax regulatory supervision as payments made to a U. Www state nm us tax S. Www state nm us tax person, if you and the U. Www state nm us tax S. Www state nm us tax branch have agreed to do so, and if their agreement is evidenced by a withholding certificate, Form W-8IMY. Www state nm us tax For this purpose, a financial institution organized under the laws of a U. Www state nm us tax S. Www state nm us tax possession is treated as a U. Www state nm us tax S. Www state nm us tax branch. Www state nm us tax Documentation In most cases, you must withhold 30% from the gross amount paid to a foreign payee unless you can reliably associate the payment with valid documentation that establishes either of the following. Www state nm us tax The payee is a U. Www state nm us tax S. Www state nm us tax person. Www state nm us tax The payee is a foreign person that is the beneficial owner of the income and is entitled to a reduced rate of withholding. Www state nm us tax In most cases, you must get the documentation before you make the payment. Www state nm us tax The documentation is not valid if you know, or have reason to know, that it is unreliable or incorrect. Www state nm us tax See Standards of Knowledge , later. Www state nm us tax If you cannot reliably associate a payment with valid documentation, you must use the presumption rules discussed later. Www state nm us tax For example, if you do not have documentation or you cannot determine the part of a payment that is allocable to specific documentation, you must use the presumption rules. Www state nm us tax The specific types of documentation are discussed in this section. Www state nm us tax However, see Withholding on Specific Income , later, as well as the instructions to the particular forms. Www state nm us tax As the withholding agent, you also may want to see the Instructions for the Requester of Forms W-8BEN, W-8ECI, W-8EXP, and W-8IMY. Www state nm us tax Section 1446 withholding. Www state nm us tax   Under section 1446 of the Code, a partnership must withhold tax on its effectively connected income allocable to a foreign partner. Www state nm us tax In most cases, a partnership determines if a partner is a foreign partner and the partner's tax classification based on the withholding certificate provided by the partner. Www state nm us tax This is the same documentation that is filed for NRA withholding, but may require additional information as discussed under each of the forms in this section. Www state nm us tax Joint owners. Www state nm us tax    If you make a payment to joint owners, you need to get documentation from each owner. Www state nm us tax Form W-9. Www state nm us tax   In most cases, you can treat the payee as a U. Www state nm us tax S. Www state nm us tax person if the payee gives you a Form W-9. Www state nm us tax The Form W-9 can be used only by a U. Www state nm us tax S. Www state nm us tax person and must contain the payee's taxpayer identification number (TIN). Www state nm us tax If there is more than one owner, you may treat the total amount as paid to a U. Www state nm us tax S. Www state nm us tax person if any one of the owners gives you a Form W-9. Www state nm us tax See U. Www state nm us tax S. Www state nm us tax Taxpayer Identification Numbers , later. Www state nm us tax U. Www state nm us tax S. Www state nm us tax persons are not subject to NRA withholding, but may be subject to Form 1099 reporting and backup withholding. Www state nm us tax Form W-8. Www state nm us tax   In most cases, a foreign payee of the income should give you a form in the Form W-8 series. Www state nm us tax Until further notice, you can rely upon Forms W-8 that contain a P. Www state nm us tax O. Www state nm us tax box as a permanent residence address provided you do not know, or have reason to know, that the person providing the form is a U. Www state nm us tax S. Www state nm us tax person and that a street address is available. Www state nm us tax You may rely on Forms W-8 for which there is a U. Www state nm us tax S. Www state nm us tax mailing address provided you received the form prior to December 31, 2001. Www state nm us tax   If certain requirements are met, the foreign person can give you documentary evidence, rather than a Form W-8. Www state nm us tax You can rely on documentary evidence in lieu of a Form W-8 for a payment made in a U. Www state nm us tax S. Www state nm us tax possession. Www state nm us tax Other documentation. Www state nm us tax   Other documentation may be required to claim an exemption from, or a reduced rate of, withholding on pay for personal services. Www state nm us tax The nonresident alien individual may have to give you a Form W-4 or a Form 8233, Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual. Www state nm us tax These forms are discussed in Pay for Personal Services Performed under Withholding on Specific Income. Www state nm us tax Beneficial Owners If all the appropriate requirements have been established on a Form W-8BEN, W-8ECI, W-8EXP or, if applicable, on documentary evidence, you may treat the payee as a foreign beneficial owner. Www state nm us tax Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding. Www state nm us tax   This form is used by a foreign person to: Establish foreign status; Claim that such person is the beneficial owner of the income for which the form is being furnished or a partner in a partnership subject to section 1446 withholding; and If applicable, claim a reduced rate of, or exemption from, withholding under an income tax treaty. Www state nm us tax   Form W-8BEN also may be used to claim that the foreign person is exempt from Form 1099 reporting and backup withholding for income that is not subject to NRA withholding. Www state nm us tax For example, a foreign person may provide a Form W-8BEN to a broker to establish that the gross proceeds from the sale of securities are not subject to Form 1099 reporting or backup withholding. Www state nm us tax Claiming treaty benefits. Www state nm us tax   You may apply a reduced rate of withholding to a foreign person that provides a Form W-8BEN claiming a reduced rate of withholding under an income tax treaty only if the person provides a U. Www state nm us tax S. Www state nm us tax TIN and certifies that: It is a resident of a treaty country; It is the beneficial owner of the income; If it is an entity, it derives the income within the meaning of section 894 of the Internal Revenue Code (it is not fiscally transparent); and It meets any limitation on benefits provision contained in the treaty, if applicable. Www state nm us tax   If the foreign beneficial owner claiming a treaty benefit is related to you, the foreign beneficial owner also must certify on Form W-8BEN that it will file Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b), if the amount subject to NRA withholding received during a calendar year exceeds, in the aggregate, $500,000. Www state nm us tax   An entity derives income for which it is claiming treaty benefits only if the entity is not treated as fiscally transparent for that income. Www state nm us tax See Fiscally transparent entity discussed earlier under Flow-Through Entities. Www state nm us tax   Limitations on benefits provisions generally prohibit third country residents from obtaining treaty benefits. Www state nm us tax For example, a foreign corporation may not be entitled to a reduced rate of withholding unless a minimum percentage of its owners are citizens or residents of the United States or the treaty country. Www state nm us tax   The exemptions from, or reduced rates of, U. Www state nm us tax S. Www state nm us tax tax vary under each treaty. Www state nm us tax You must check the provisions of the tax treaty that apply. Www state nm us tax Tables at the end of this publication show the countries with which the United States has income tax treaties and the rates of withholding that apply in cases where all conditions of the particular treaty articles are satisfied. Www state nm us tax   If you know, or have reason to know, that an owner of income is not eligible for treaty benefits claimed, you must not apply the treaty rate. Www state nm us tax You are not, however, responsible for misstatements on a Form W-8, documentary evidence, or statements accompanying documentary evidence for which you did not have actual knowledge, or reason to know, that the statements were incorrect. Www state nm us tax Exceptions to TIN requirement. Www state nm us tax   A foreign person does not have to provide a TIN to claim a reduced rate of withholding under a treaty if the requirements for the following exceptions are met. Www state nm us tax Income from marketable securities (discussed next). Www state nm us tax Unexpected payments to an individual (discussed under U. Www state nm us tax S. Www state nm us tax Taxpayer Identification Numbers ). Www state nm us tax Marketable securities. Www state nm us tax   A Form W-8BEN provided to claim treaty benefits does not need a U. Www state nm us tax S. Www state nm us tax TIN if the foreign beneficial owner is claiming the benefits on income from marketable securities. Www state nm us tax For this purpose, income from a marketable security consists of the following items. Www state nm us tax Dividends and interest from stocks and debt obligations that are actively traded. Www state nm us tax Dividends from any redeemable security issued by an investment company registered under the Investment Company Act of 1940 (mutual fund). Www state nm us tax Dividends, interest, or royalties from units of beneficial interest in a unit investment trust that are (or were upon issuance) publicly offered and are registered with the SEC under the Securities Act of 1933. Www state nm us tax Income related to loans of any of the above securities. Www state nm us tax Offshore accounts. Www state nm us tax   If a payment is made outside the United States to an offshore account, a payee may give you documentary evidence, rather than Form W-8BEN. Www state nm us tax   In most cases, a payment is made outside the United States if you complete the acts necessary to effect the payment outside the United States. Www state nm us tax However, an amount paid by a bank or other financial institution on a deposit or account usually will be treated as paid at the branch or office where the amount is credited. Www state nm us tax An offshore account is an account maintained at an office or branch of a U. Www state nm us tax S. Www state nm us tax or foreign bank or other financial institution at any location outside the United States. Www state nm us tax   You may rely on documentary evidence given to you by a nonqualified intermediary or a flow-through entity with its Form W-8IMY. Www state nm us tax This rule applies even though you make the payment to a nonqualified intermediary or flow-through entity in the United States. Www state nm us tax In most cases, the nonqualified intermediary or flow-through entity that gives you documentary evidence also will have to give you a withholding statement, discussed later. Www state nm us tax Documentary evidence. Www state nm us tax   You may apply a reduced rate of withholding to income from marketable securities (discussed earlier) paid outside the United States to an offshore account if the beneficial owner gives you documentary evidence in place of a Form W-8BEN. Www state nm us tax To claim treaty benefits, the documentary evidence must be one of the following: A certificate of residence that: Is issued by a tax official of the treaty country of which the foreign beneficial owner claims to be a resident, States that the person has filed its most recent income tax return as a resident of that country, and Is issued within 3 years prior to being presented to you. Www state nm us tax Documentation for an individual that: Includes the individual's name, address, and photograph, Is an official document issued by an authorized governmental body, and Is issued no more than 3 years prior to being presented to you. Www state nm us tax Documentation for an entity that: Includes the name of the entity, Includes the address of its principal office in the treaty country, and Is an official document issued by an authorized governmental body. Www state nm us tax In addition to the documentary evidence, a foreign beneficial owner that is an entity must provide a statement that it derives the income for which it claims treaty benefits and that it meets one or more of the conditions set forth in a limitation on benefits article, if any, (or similar provision) contained in the applicable treaty. Www state nm us tax Form W-8ECI, Certificate of Foreign Person's Claim That Income Is Effectively Connected With the Conduct of a Trade or Business in the United States. Www state nm us tax   This form is used by a foreign person to: Establish foreign status, Claim that such person is the beneficial owner of the income for which the form is being furnished, and Claim that the income is effectively connected with the conduct of a trade or business in the United States. Www state nm us tax (See Effectively Connected Income , later. Www state nm us tax )   Effectively connected income for which a valid Form W-8ECI has been provided is generally not subject to NRA withholding. Www state nm us tax   If a partner submits this form to a partnership, the income claimed to be effectively connected with the conduct of a U. Www state nm us tax S. Www state nm us tax trade or business is subject to withholding under section 1446. Www state nm us tax If the partner has made, or will make, an election under section 871(d) or 882(d), the partner must submit Form W-8ECI, and attach a copy of the election, or a statement of intent to elect, to the form. Www state nm us tax    If the partner's only effectively connected income is the income allocated from the partnership and the partner is not making the election under section 871(d) or 882(d), the partner should provide Form W-8BEN to the partnership. Www state nm us tax Form W-8EXP, Certificate of Foreign Government or Other Foreign Organization for United States Tax Withholding. Www state nm us tax   This form is used by a foreign government, international organization, foreign central bank of issue, foreign tax-exempt organization, foreign private foundation, or government of a U. Www state nm us tax S. Www state nm us tax possession to: Establish foreign status, Claim that such person is the beneficial owner of the income for which the form is being furnished, and Claim a reduced rate of, or an exemption from, withholding as such an entity. Www state nm us tax   If the government or organization is a partner in a partnership carrying on a trade or business in the United States, the effectively connected income allocable to the partner is subject to withholding under section 1446. Www state nm us tax   See Foreign Governments and Certain Other Foreign Organizations , later. Www state nm us tax Foreign Intermediaries and Foreign Flow-Through Entities Payments made to a foreign intermediary or foreign flow-through entity are treated as made to the payees on whose behalf the intermediary or entity acts. Www state nm us tax The Form W-8IMY provided by a foreign intermediary or flow-through entity must be accompanied by additional information for you to be able to reliably associate the payment with a payee. Www state nm us tax The additional information required depends on the type of intermediary or flow-through entity and the extent of the withholding responsibilities it assumes. Www state nm us tax Form W-8IMY, Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U. Www state nm us tax S. Www state nm us tax Branches for United States Tax Withholding. Www state nm us tax   This form is used by foreign intermediaries and foreign flow-through entities, as well as certain U. Www state nm us tax S. Www state nm us tax branches, to: Represent that a foreign person is a qualified intermediary or nonqualified intermediary, Represent, if applicable, that the qualified intermediary is assuming primary NRA withholding responsibility and/or primary Form 1099 reporting and backup withholding responsibility, Represent that a foreign partnership or a foreign simple or grantor trust is a withholding foreign partnership or a withholding foreign trust, Represent that a foreign flow-through entity is a nonwithholding foreign partnership, or a nonwithholding foreign trust and that the income is not effectively connected with the conduct of a trade or business in the United States, Represent that the provider is a U. Www state nm us tax S. Www state nm us tax branch of a foreign bank or insurance company and either is agreeing to be treated as a U. Www state nm us tax S. Www state nm us tax person or is transmitting documentation of the persons on whose behalf it is acting, or Represent that, for purposes of section 1446, it is an upper-tier foreign partnership or a foreign grantor trust and that the form is being used to transmit the required documentation. Www state nm us tax For information on qualifying as an upper-tier foreign partnership, see Regulations section 1. Www state nm us tax 1446-5. Www state nm us tax Qualified Intermediaries In most cases, a QI is any foreign intermediary that has entered into a QI withholding agreement (discussed earlier) with the IRS. Www state nm us tax A foreign intermediary that has received a QI employer identification number (QI-EIN) may represent on Form W-8IMY that it is a QI before it receives a fully executed agreement. Www state nm us tax The intermediary can claim that it is a QI until the IRS revokes its QI-EIN. Www state nm us tax The IRS will revoke a QI-EIN if the QI agreement is not executed and returned to the IRS within a reasonable period of time after the agreement was sent to the intermediary for signature. Www state nm us tax Responsibilities. Www state nm us tax   Payments made to a QI that does not assume NRA withholding responsibility are treated as paid to its account holders and customers. Www state nm us tax However, a QI is not required to provide you with documentation it obtains from its foreign account holders and customers. Www state nm us tax Instead, it provides you with a withholding statement that contains withholding rate pool information. Www state nm us tax 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 state nm us tax A qualified intermediary is required to provide you with information regarding U. Www state nm us tax S. Www state nm us tax persons subject to Form 1099 reporting and to provide you withholding rate pool information separately for each such U. Www state nm us tax S. Www state nm us tax person unless it has assumed Form 1099 reporting and backup withholding responsibility. Www state nm us tax For the alternative procedure for providing rate pool information for U. Www state nm us tax S. Www state nm us tax non-exempt persons, see the Form W-8IMY instructions. Www state nm us tax   The withholding statement must: Designate those accounts for which it acts as a qualified intermediary, Designate those accounts for which it assumes primary NRA withholding responsibility and/or primary Form 1099 and backup withholding responsibility, and Provide sufficient information for you to allocate the payment to a withholding rate pool. Www state nm us tax   The extent to which you must have withholding rate pool information depends on the withholding and reporting obligations assumed by the QI. Www state nm us tax Primary responsibility not assumed. Www state nm us tax   If a QI does not assume primary NRA withholding responsibility or primary Form 1099 reporting and backup withholding responsibility for the payment, you can reliably associate the payment with valid documentation only to the extent you can reliably determine the part of the payment that relates to each withholding rate pool for foreign payees. Www state nm us tax Unless the alternative procedure applies, the qualified intermediary must provide you with a separate withholding rate pool for each U. Www state nm us tax S. Www state nm us tax person subject to Form 1099 reporting and/or backup withholding. Www state nm us tax The QI must provide a Form W-9 or, in the absence of the form, the name, address, and TIN, if available, for such person. Www state nm us tax Primary NRA withholding responsibility assumed. Www state nm us tax   If you make a payment to a QI that assumes primary NRA withholding responsibility (but not primary Form 1099 reporting and backup withholding responsibility), you can reliably associate the payment with valid documentation only to the extent you can reliably determine the part of the payment that relates to the withholding rate pool for which the QI assumes primary NRA withholding responsibility and the part of the payment attributable to withholding rate pools for each U. Www state nm us tax S. Www state nm us tax person, unless the alternative procedure applies, subject to Form 1099 reporting and/or backup withholding. Www state nm us tax The QI must provide a Form W-9 or, in the absence of the form, the name, address, and TIN, if available, for such person. Www state nm us tax Primary NRA and Form 1099 responsibility assumed. Www state nm us tax   If you make a payment to a QI that assumes both primary NRA withholding responsibility and primary Form 1099 reporting and backup withholding responsibility, you can reliably associate a payment with valid documentation provided that you receive a valid Form W-8IMY. Www state nm us tax It is not necessary to associate the payment with withholding rate pools. Www state nm us tax Example. Www state nm us tax You make a payment of dividends to a QI. Www state nm us tax It has five customers: two are foreign persons who have provided documentation entitling them to a 15% rate of withholding on dividends; two are foreign persons subject to a 30% rate of withholding on dividends; and one is a U. Www state nm us tax S. Www state nm us tax individual who provides it with a Form W-9. Www state nm us tax Each customer is entitled to 20% of the dividend payment. Www state nm us tax The QI does not assume any primary withholding responsibility. Www state nm us tax The QI gives you a Form W-8IMY with which it associates the Form W-9 and a withholding statement that allocates 40% of the dividend to a 15% withholding rate pool, 40% to a 30% withholding rate pool, and 20% to the U. Www state nm us tax S. Www state nm us tax individual. Www state nm us tax You should report on Forms 1042-S 40% of the payment as made to a 15% rate dividend pool and 40% of the payment as made to a 30% rate dividend pool. Www state nm us tax The part of the payment allocable to the U. Www state nm us tax S. Www state nm us tax individual (20%) is reportable on Form 1099-DIV. Www state nm us tax Smaller partnerships and trusts. Www state nm us tax   A QI may apply special rules to a smaller partnership or trust (Joint Account Provision) only if the partnership or trust meets the following conditions. Www state nm us tax It is a foreign partnership or foreign simple or grantor trust. Www state nm us tax It is a direct account holder of the QI. Www state nm us tax It does not have any partner, beneficiary, or owner that is a U. Www state nm us tax S. Www state nm us tax person or a pass- through partner, beneficiary, or owner. Www state nm us tax   For information on these rules, see section 4A. Www state nm us tax 01 of the QI agreement. Www state nm us tax This is found in Appendix 3 of Revenue Procedure 2003-64. Www state nm us tax Also see Revenue Procedure 2004-21. Www state nm us tax Related partnerships and trusts. Www state nm us tax    A QI may apply special rules to a related partnership or trust only if the partnership or trust meets the following conditions. Www state nm us tax It is a foreign partnership or foreign simple or grantor trust. Www state nm us tax It is either: A direct account holder of the QI, or An indirect account holder of the QI that is a direct partner, beneficiary, or owner of a partnership or trust to which the QI has applied this rule. Www state nm us tax For information on these rules, see section 4A. Www state nm us tax 02 of the QI agreement. Www state nm us tax This is found in Appendix 3 of Revenue Procedure 2003-64. Www state nm us tax Also see Revenue Procedure 2005-77. Www state nm us tax Nonqualified Intermediaries If you are making a payment to an NQI, foreign flow-through entity, or U. Www state nm us tax S. Www state nm us tax branch that is using Form W-8IMY to transmit information about the branch's account holders or customers, you can treat the payment (or a part of the payment) as reliably associated with valid documentation from a specific payee only if, prior to making the payment: You can allocate the payment to a valid Form W-8IMY, You can reliably determine how much of the payment relates to valid documentation provided by a payee (a person that is not itself a foreign intermediary, flow- through entity, or U. Www state nm us tax S. Www state nm us tax branch), and You have sufficient information to report the payment on Form 1042-S or Form 1099, if reporting is required. Www state nm us tax The NQI, flow-through entity, or U. Www state nm us tax S. Www state nm us tax branch must give you certain information on a withholding statement that is associated with the Form W-8IMY. Www state nm us tax A withholding statement must be updated to keep the information accurate prior to each payment. Www state nm us tax Withholding statement. Www state nm us tax   In most cases, a withholding statement must contain the following information. Www state nm us tax The name, address, and TIN (if any, or if required) of each person for whom documentation is provided. Www state nm us tax The type of documentation (documentary evidence, Form W-8, or Form W-9) for every person for whom documentation has been provided. Www state nm us tax The status of the person for whom the documentation has been provided, such as whether the person is a U. Www state nm us tax S. Www state nm us tax exempt recipient (U. Www state nm us tax S. Www state nm us tax person exempt from Form 1099 reporting), U. Www state nm us tax S. Www state nm us tax non-exempt recipient (U. Www state nm us tax S. Www state nm us tax person subject to Form 1099 reporting), or a foreign person. Www state nm us tax For a foreign person, the statement must indicate whether the person is a beneficial owner or a foreign intermediary, flow-through entity, or a U. Www state nm us tax S. Www state nm us tax branch. Www state nm us tax The type of recipient the person is, based on the recipient codes used on Form 1042-S. Www state nm us tax Information allocating each payment, by income type, to each payee (including U. Www state nm us tax S. Www state nm us tax exempt and U. Www state nm us tax S. Www state nm us tax non-exempt recipients) for whom documentation has been provided. Www state nm us tax The rate of withholding that applies to each foreign person to whom a payment is allocated. Www state nm us tax A foreign payee's country of residence. Www state nm us tax If a reduced rate of withholding is claimed, the basis for a reduced rate of withholding (for example, portfolio interest, treaty benefit, etc. Www state nm us tax ). Www state nm us tax In the case of treaty benefits claimed by entities, whether the applicable limitation on benefits statement and the statement that the foreign person derives the income for which treaty benefits are claimed, have been made. Www state nm us tax The name, address, and TIN (if any) of any other NQI, flow-through entity, or U. Www state nm us tax S. Www state nm us tax branch from which the payee will directly receive a payment. Www state nm us tax Any other information a withholding agent requests to fulfill its reporting and withholding obligations. Www state nm us tax Alternative procedure. Www state nm us tax   Under this alternative procedure the NQI can give you the information that allocates each payment to each foreign and U. Www state nm us tax S. Www state nm us tax exempt recipient by January 31 following the calendar year of payment, rather than prior to the payment being made as otherwise required. Www state nm us tax To take advantage of this procedure, the NQI must: (a) inform you, on its withholding statement, that it is using the alternative procedure; and (b) obtain your consent. Www state nm us tax You must receive the withholding statement with all the required information (other than item 5) prior to making the payment. Www state nm us tax    This alternative procedure cannot be used for payments to U. Www state nm us tax S. Www state nm us tax non-exempt recipients. Www state nm us tax Therefore, an NQI must always provide you with allocation information for all U. Www state nm us tax S. Www state nm us tax non-exempt recipients prior to a payment being made. Www state nm us tax Pooled withholding information. Www state nm us tax   If an NQI uses the alternative procedure, it must provide you with withholding rate pool information, as opposed to individual allocation information, prior to the payment of a reportable amount. Www state nm us tax A withholding rate pool is a payment of a single type of income (as determined by the income categories on Form 1042-S) that is subject to a single rate of withholding. Www state nm us tax For example, an NQI that has foreign account holders receiving royalties and dividends, both subject to the 15% rate, will provide you with information for two withholding rate pools (one for royalties and one for dividends). Www state nm us tax The NQI must provide you with the payee specific allocation information (information allocating each payment to each payee) by January 31 following the calendar year of payment. Www state nm us tax Failure to provide allocation information. Www state nm us tax   If an NQI fails to provide you with the payee specific allocation information for a withholding rate pool by January 31, you must not apply the alternative procedure to any of the NQI's withholding rate pools from that date forward. Www state nm us tax You must treat the payees as undocumented and apply the presumption rules, discussed later in Presumption Rules . Www state nm us tax An NQI is deemed to have f
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Winter 2014 Statistics of Income Bulletin Now Available


IR-2014-33, March 20, 2014

WASHINGTON — The Internal Revenue Service today announced the availability of the winter 2014 issue of the Statistics of Income Bulletin, which features preliminary data for individual income tax returns filed for Tax Year 2012.

The Statistics of Income (SOI) Division produces the SOI Bulletin on a quarterly basis. Articles included in the publication provide the most recent data available from various tax and information returns filed by U.S. taxpayers. This issue includes articles on the following topics:

Individual Income Tax Returns, Preliminary Data, 2012: Taxpayers filed 145 million individual income tax returns for 2012. The adjusted gross income (AGI) reported on these returns totaled $9 trillion, a 9 percent increase from the previous year. Taxable income rose almost 12 percent to more than $6 trillion, accordingly, total income tax increased 15 percent to $1.2 trillion. Although taxpayers reported $29 billion in alternative minimum tax, an increase of almost 8 percent compared to the prior year, the number of returns reporting the AMT fell one percent.

Sales of Capital Assets Panel Data Reported on Individual Tax Returns, 2004-2007:  The SOI panel study of individual taxpayer trends in taxes and income showed the following increases from 2004 through 2007.

  • Net gains and losses increased 84.7 percent, from $496.3 billion to $916.5 billion.
  • Capital gains rose 69.2 percent to $1.1 trillion during this same period.

For all 4 years of the study, taxpayers realized most combined short- and long-term net gains less losses from passthrough entities (partnerships, S corporations, and fiduciaries).

Split-Interest Trusts, Filing Year 2012:  Tax preparers filed 113,688 Forms 5227 to report the financial activities of split-interest trusts to the IRS for Filing Year 2012, a 3.4-percent decline from 2011. Split-interest trusts reported 16,500 distributions of principal ($2.5 billion)  and 15,580 distributions of income ($1,793.7 billion) for the year. Asset contributions rose to more than $5.2 billion, a 74 percent increase over the previous year. Charitable remainder trusts continued to be the most common split-interest trust, accounting for 93 percent of the returns filed.

Nonprofit Charitable Organizations, 2010: Tax exempt public charities (501(c)(3) organizations) filed almost 270,000 Forms 990 and 990-EZ and reported $2.9 trillion in assets for Tax Year 2010, an increase of 9 percent from the previous year. These organizations reported $1.6 trillion in total revenue, nearly three-quarters ($1.2 trillion) of which came from program services. They reported $1.5 trillion in expenses.

The Statistics of Income Bulletin is available for download at IRS.gov/taxstats. Printed copies of the Statistics of Income Bulletin are available from the Superintendent of Documents, U.S. Government Printing Office, P.O. Box 371954, Pittsburgh, PA 15250-7954. The annual subscription rate is $67 ($93.80 foreign), single issues cost $44 ($61.60 foreign).

For more information about these data, write to the Internal Revenue Service (RAS:S), Director, Statistics of Income, 1111 Constitution Ave., NW (K-Room 4112), Washington, DC 20224-0002.

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Page Last Reviewed or Updated: 20-Mar-2014

The Www State Nm Us Tax

Www state nm us tax 13. Www state nm us tax   Payment of Taxes Table of Contents How To Make Deposits When To Make Deposits Amount of DepositsSafe Harbor Rule Generally, semimonthly deposits of excise taxes are required. Www state nm us tax A semimonthly period is the first 15 days of a month (the first semimonthly period) or the 16th through the last day of a month (the second semimonthly period). Www state nm us tax However, no deposit is required for the situations listed below; the taxes are payable with Form 720. Www state nm us tax The net liability for taxes listed in Part I (Form 720) does not exceed $2,500 for the quarter. Www state nm us tax The gas guzzler tax is being paid on a one-time filing. Www state nm us tax The liability is for taxes listed in Part II (Form 720), except for the floor stocks tax which generally requires a single deposit. Www state nm us tax How To Make Deposits Electronic deposit requirement. Www state nm us tax   You must use electronic funds transfer to make excise tax deposits. Www state nm us tax Generally, electronic funds transfers are made using the Electronic Federal Tax Payment System (EFTPS). Www state nm us tax If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make deposits on your behalf. Www state nm us tax Also, you may arrange for your financial institution to initiate a same-day wire payment on your behalf. Www state nm us tax   EFTPS is a free service provided by the Department of Treasury. Www state nm us tax Services provided by your tax professional, financial institution, payroll service, or other third party may have a fee. Www state nm us tax To get more information about EFTPS or to enroll in EFTPS, visit www. Www state nm us tax eftps. Www state nm us tax gov or call 1-800-555-4477. Www state nm us tax Additional information about EFTPS is also available in Publication 966, Electronic Federal Tax Payment System: A Guide to Getting Started. Www state nm us tax    Depositing on time. Www state nm us tax For EFTPS deposits to be on time, you must initiate the transaction at least 1 day before the date the deposit is due (before 8:00 p. Www state nm us tax m. Www state nm us tax Eastern time). Www state nm us tax You will automatically be enrolled in EFTPS when you apply for an EIN. Www state nm us tax You will receive a separate mailing containing instructions for activating your EFTPS enrollment after you receive your EIN. Www state nm us tax When To Make Deposits There are two methods for determining deposits: the regular method and the alternative method. Www state nm us tax The regular method applies to all taxes in Part I of Form 720 except for communications and air transportation taxes if deposits are based on amounts billed or tickets sold, rather than on amounts actually collected. Www state nm us tax See Alternative method below. Www state nm us tax If you are depositing more than one tax under a method, combine all the taxes under the method and make one deposit for the semimonthly period. Www state nm us tax Regular method. Www state nm us tax   The deposit of tax for a semimonthly period is due by the 14th day following that period. Www state nm us tax Generally, this is the 29th day of a month for the first semimonthly period and the 14th day of the following month for the second semimonthly period. Www state nm us tax If the 14th or the 29th day falls on a Saturday, Sunday, or legal holiday, you must make the deposit by the immediately preceding day that is not a Saturday, Sunday, or legal holiday. Www state nm us tax Alternative method (IRS Nos. Www state nm us tax 22, 26, 27, and 28). Www state nm us tax   Deposits of communications and air transportation taxes may be based on taxes included in amounts billed or tickets sold during a semimonthly period instead of on taxes actually collected during the period. Www state nm us tax Under the alternative method, the tax included in amounts billed or tickets sold during a semimonthly period is considered collected during the first 7 days of the second following semimonthly period. Www state nm us tax The deposit of tax is due by the 3rd banking day after the 7th day of that period. Www state nm us tax   For an example of the alternative method, see the Instructions for Form 720. Www state nm us tax To use the alternative method, you must keep a separate account of the tax included in amounts billed or tickets sold during the month and report on Form 720 the tax included in amounts billed or tickets sold and not the amount of tax that is actually collected. Www state nm us tax For example, amounts billed in December, January, and February are considered collected during January, February, and March and are reported on Form 720 as the tax for the 1st quarter of the calendar year. Www state nm us tax The separate account for each month must reflect: All items of tax included in amounts billed or tickets sold during the month, and Other items of adjustment relating to tax for prior months (within the statute of limitations on credits or refunds). Www state nm us tax The separate account for any month cannot include an adjustment resulting from a refusal to pay or inability to collect unless the refusal has been reported to the IRS. Www state nm us tax See Uncollected Tax Report in chapter 4. Www state nm us tax The net amount of tax that is considered collected during the semimonthly period must be either: The net amount of tax reflected in the separate account for the corresponding semimonthly period of the preceding month, or One-half of the net amount of tax reflected in the separate account for the preceding month. Www state nm us tax Special rule for deposits of taxes in September. Www state nm us tax   See the Instructions for Form 720 for a special rule on deposits made in September. Www state nm us tax Amount of Deposits Deposits for a semimonthly period generally must be at least 95% of the net tax liability for that period unless the safe harbor rule (discussed later) applies. Www state nm us tax Generally, you do not have to make a deposit for a period in which you incurred no tax liability. Www state nm us tax Net tax liability. Www state nm us tax   Your net tax liability is your tax liability for the period minus any claims on Schedule C (Form 720) for the period. Www state nm us tax You may figure your net tax liability for a semimonthly period by dividing your net liability incurred during the calendar month by two. Www state nm us tax If you use this method, you must use it for all semimonthly periods in the calendar quarter. Www state nm us tax Do not reduce your liability by any amounts from Form 720X. Www state nm us tax Safe Harbor Rule The safe harbor rule applies separately to deposits under the regular method and the alternative method. Www state nm us tax Persons who filed Form 720 for the look-back quarter (the 2nd calendar quarter preceding the current quarter) are considered to meet the semimonthly deposit requirement if the deposit for each semimonthly period in the current quarter is at least 1/6 (16. Www state nm us tax 67%) of the net tax liability reported for the look-back quarter. Www state nm us tax For the semimonthly period for which the additional deposit is required, the additional deposit must be at least 11/90 12. Www state nm us tax 23%), 10/90 (11. Www state nm us tax 12%) for non-EFTPS, of the net tax liability reported for the look-back quarter. Www state nm us tax Also, the total deposit for that semimonthly period must be at least 1/6 (16. Www state nm us tax 67%) of the net tax liability reported for the look-back quarter. Www state nm us tax Exceptions. Www state nm us tax   The safe harbor rule does not apply to: The 1st and 2nd quarters beginning on or after the effective date of an increase in the rate of tax unless the deposit of taxes for each semimonthly period in the calendar quarter is at least 1/6 (16. Www state nm us tax 67%) of the tax liability you would have had for the look-back quarter if the increased rate of tax had been in effect for that look-back quarter, Any quarter if liability includes any tax not in effect throughout the look-back quarter, or For deposits under the alternative method, any quarter if liability includes any tax not in effect throughout the look-back quarter and the month preceding the look-back quarter. Www state nm us tax Requirements to be met. Www state nm us tax   For the safe harbor rule to apply, you must: Make each deposit timely at an authorized financial institution, and Pay any underpayment for the current quarter by the due date of the return. Www state nm us tax    The IRS may withdraw the right to make deposits of tax using the safe harbor rule from any person not complying with these rules. Www state nm us tax Tax rate increases. Www state nm us tax   You must modify the safe harbor rule if there has been an increase in the rate of tax. Www state nm us tax You must figure your tax liability in the look-back quarter as if the increased rate had been in effect. Www state nm us tax To qualify for the safe harbor rule, your deposits cannot be less than 1/6 of the refigured tax liability. Www state nm us tax Prev  Up  Next   Home   More Online Publications