The US Treasury and Inland Revenue Service have finalised regulations on the tax withholding obligations of US partnerships that include for...

The US Treasury and Inland Revenue Service have finalised regulations on the tax withholding obligations of US partnerships that include foreign partners. Under current rules, foreign individuals are subject to US tax for income from doing business in the US, in addition to income earned in the US through a partnership. To ensure the tax gets collected the IRS requires that partnerships withhold tax on behalf of the foreign partner. The final rules, first proposed in September 2003, provide guidance on how to determine a foreign partner's share of partnership income and to calculate withholding tax and payment dates. Interest, penalties and extra taxes for failure to comply with the regulations have also been addressed.