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socrateaser, Lawyer
Category: Tax
Satisfied Customers: 37820
Experience:  Retired (mostly)
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I own a company that is incorporated under the laws of the

Customer Question

I own a company that is incorporated under the laws of the Province of Ontario. We provide communications consulting services to large companies (Bank of America is an example) and we design documents for their customers (like statements, bills etc). About 50% of our work is done for US clients. I have no offices or US-based employees. Our work is project-based and during an elapsed project time of 12 weeks, we visit our client twice, for a total of 2.5 days (meetings, interviews) and value of that time is about 10% of the project value. Based on this definition, do I need to be paying US or state taxes? Do I need a EIN #? If a client asks me to fill out a W8EIC, should I?
Submitted: 5 years ago.
Category: Tax
Expert:  socrateaser replied 5 years ago.
A Canada business that performs personal services for a U.S. business is exempt from U.S. taxation. The U.S. business is required to withhold 30% of the Canada business' income unless the Canada business provides an IRS Form 8233, along with the Form W-8BEN to the U.S. business proving an exemption from U.S. taxes.

There is a huge amount of uncertainty concerning this issue. The IRS regulations are unbelievably convoluted, leading to U.S. businesses routinely withholding despite it not being required. If you are subjected to withholding, your only recourse is to file a form 1120-F and claim the 30% withholding as a refund.

Hope this helps.

Customer: replied 5 years ago.
The form you referenced and context of your reply seems to me to be incorrect. I am not providing "personal services". The corporation I own, the employees I have on staff is providing the services. In that context, could you please reply again.
Thank you,
Expert:  socrateaser replied 5 years ago.
You can ignore the Form 8233 -- provide the Form W-8BEN to the payor corporation, check box 9(a), and write in Canada in the applicable space on that line, in order to exempt your corporation from U.S. taxation and withholding, under Article VII, Paragraph 1 of the U.S.-Canada Tax Convention.

Hope this helps.

Customer: replied 5 years ago.
I'm sorry, but this doesn't make sense to me and I think is the type of issue I need to talk to someone about (versus) email. Thank you for trying.
Expert:  socrateaser replied 5 years ago.
Best of luck.