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2022 Publication 515 is now final!

On March 3, 2022, the Internal Revenue Service (IRS) issued a critical update with the release of Publication 515, “Withholding of Tax on Nonresident Aliens and Foreign Entities,” slated for use throughout the tax year 2022. This publication serves as an essential guide for taxpayers, withholding agents, and foreign entities navigating the complex landscape of tax withholding obligations in the United States.

A significant highlight of the updated Publication 515 is the incorporation of several noteworthy changes aimed at enhancing compliance and reporting accuracy.

These changes encompass a wide range of forms, codes, and provisions, reflecting the IRS’s ongoing efforts to modernize tax administration and address emerging regulatory challenges:

  1. Updates to Form 1042-S Income and Chapter 3 Status Codes: The publication outlines revisions to Form 1042-S, the primary document used to report income paid to foreign persons subject to withholding. These updates include changes to income and Chapter 3 status codes, ensuring alignment with current tax laws and reporting requirements.
  2. Introduction of a New Limitation on Benefits Code: Publication 515 introduces a new limitation on benefits code, providing additional guidance on eligibility criteria and requirements for claiming treaty benefits under relevant tax treaties.
  3. Changes to Forms W-8BEN, W-8BEN-E, W-8ECI, and W-8IMY: The publication details updates to various Forms W-8 used by foreign entities and individuals to establish their status for withholding tax purposes. These changes aim to streamline the process of obtaining and verifying taxpayer information while ensuring compliance with regulatory requirements.
  4. Revisions to Forms 8288 and 8288-A: Publication 515 highlights changes to Forms 8288 and 8288-A, which are used to report and withhold tax on the disposition of U.S. real property interests by foreign persons. These revisions reflect updates to reporting requirements and procedures, facilitating more efficient tax administration and compliance.
  5. Development of a New Form for Reporting under Section 1446(f)(4): The publication notes the development of a new form for reporting purposes under section 1446(f)(4), which pertains to the withholding tax obligations associated with certain dispositions of partnership interests by foreign persons. While still under development, this new form underscores the IRS’s commitment to addressing evolving tax compliance challenges.

Overall, the updates outlined in Publication 515 for the tax year 2022 underscore the IRS’s ongoing efforts to modernize tax withholding and reporting processes while ensuring compliance with regulatory requirements. By staying abreast of these changes and adhering to the guidelines outlined in Publication 515, taxpayers, withholding agents, and foreign entities can navigate the complex landscape of tax withholding with confidence and integrity.

Check out the 2022 Pub. 515 here:

https://www.irs.gov/pub/irs-pdf/p515.pdf

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2022 Publication 515 is now final!

This document contains general information only and is not a substitute for accounting, tax, or any other professional advice or services. The information provided is considered accurate at the time of publishing and will not be updated with new regulation requirements.

Comply Connect – March 2024 – Issue 9

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