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How, as a nonresident alien from The Netherlands and a foreign

investor do I reclaim the...
How, as a nonresident alien from The Netherlands and a foreign investor do I reclaim the witholding tax (above the 15% rate ) from cash distribution (dividend) paid by Legacy Reserves (LGCY). a Ltd Partnership Fund. Can you provide me with an address to file my request?

Thank you,
Robert Deutman
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Answered in 22 minutes by:
11/30/2012
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,695
Experience: Taxes, Immigration, Labor Relations
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LEV :

Hi and welcome to Just Answer!
First of all - according to the tax treaty between the US and the Netherlands - dividends paid by US corporations are subject of reduced withholding - 15% instead of 30% as for other nonresident aliens.
However qualified dividends - are subject of 5% withholding.
See for reference IRS publication 515 - page 41 - http://www.irs.gov/pub/irs-pdf/p515.pdf
and the tax treaty - www.irs.gov/pub/irs-trty/nether.pdf
To claim a reduced withholding - you need to provide a signed forms W8BEN to the payer - and claim tax treaty benefits - www.irs.gov/pub/irs-pdf/fw8ben.pdf
Generally - according to your information - your income is not effectively connected to the trade or business activities in the US - and is taxed at flat rate - and most likely you are not entitled for a refund. However - you may claim a credit for US taxed on your tax return in the Netherlands - thus effectively will avoid double taxation.
In case your withholding is more that your tax liability - you may file a tax return as a nonresident and determine your actual tax liability. In this case you will be refunded the difference.
Here is the form to use - 1040NR - www.irs.gov/pub/irs-pdf/f1040nr.pdf
here are instructions - www.irs.gov/pub/irs-pdf/i1040nr.pdf
Mailing address may be found in instructions - page 5 -


Department of the Treasury


Internal Revenue Service


Austin, TXNNN-NN-NNNNU.S.A.

LEV :

Please be sure to ask for clarification as needed.
My goal is to provide EXCELLENT service - and I will address all your concerns.

Customer:

Do I have - in my case - to send the W8BEN form to Legacy Reserves. In the instruction of this form it is stated: do not nsend this form to the IRS. Because ofn the tax treaty between the USA and The Netherlands I can claim a credit of 15% of the dividend paid on my tax return in The Netherlands, but a claim of more than 15% is not rewarded; with other words: I have to reclaim the difference (of the tax withhold) myself.

LEV :

Yes - form W8BEN should be provided to the payer - not to the IRS. Because you are a nonresident alien from The Netherlands - you should use this form to claim reduced withholding based on the tax treaty. The tax treaty overrides general tax laws.


If you held shares more than a year – dividends are qualified and are taxed at 5% rate.

Customer:

Your last sentence: Even in a Ltd partnership ? See: Press Release Legacy Reserves LP 25 October 2012

LEV :

You are also correct - that on your Netherlands tax return you may claim a credit of your US tax liability. If withholding is more than your actual tax liability - the difference may be claimed from the IRS only by filing the tax return - form 1040NR - I referenced above.

LEV :

Partnerships generally do not pay dividends out of their business income - but in case the partnership receives dividends from shares owned - they are passed to partners as dividends.
So you need to be clear what type of income do you receive.

Customer:

At present I can't open the sites provided by you. I will try next week.

Customer:

Thank you and have a nice weekend.

LEV :

Sure - take your time - these are IRS forms.

LEV :

You may come back later if needed and please post all your questions.
I might be not immediately available - but surely will reply.

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,695
Experience: Taxes, Immigration, Labor Relations
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Customer reply replied 4 years ago
Thank you for your advise. I got a reply and refund from the IRS. The only questionable point to make ( and I telephoned the IRS already on this): I got a check of nearly 15x the amount I asked for. .
If the IRS made adjustments to your tax return - either tax liability increased or decreased - you should receive a letter with explanation.
The letter should arrive shortly after you receive a refund check.
The letter will explain what changes the IRS made and why.
Be sure that IRS has your correct address.
In additional - there might be an interest added to the amount of your refund - but that amount would be relatively small.
In additional - you may request a transcript of your IRS account which provides details on tax calculations. To request such transcript - use the form 4506T - www.irs.gov/pub/irs-pdf/f4506t.pdf
There is no fee or transcripts.
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