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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15318
Experience:  15years with H & R Block. Divisional leader, Instructor
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Robin: Are Sale Proceeds remitted to a NON-US entity

Customer Question

Good Morning Robin: Are Sale Proceeds remitted to a NON-US entity reportable on a Form 1042S by a US Bank/Institution?
Submitted: 1 year ago.
Category: Tax
Expert:  Robin D. replied 1 year ago.

Hello,

The 1042S is used to report amounts subject to withholding. Every withholding agent must file an information return on Form 1042-S to report amounts paid during the preceding calendar year that are Amounts Subject to Reporting on Form 1042-S. An agent must file a Form 1042-S even if they did not withhold tax.

The withholding agent may be an individual, corporation, partnership, trust, association, or any other entity.

A financial institution (FI) is an entity described in Regulations section 1.1471-5(e).

There is a long list of the payments subject to this withholding and so the 1042S reporting. For sales proceeds, Effectively connected income (ECI) woudl apply. ECI includes amounts that are (or are presumed to be) effectively connected with the conduct of a trade or business in the United States even if no withholding certificate is required. Note that bank deposit interest is subject to Form 1042-S reporting if it is ECI or otherwise reportable on Form 1042-S .

Customer: replied 1 year ago.
Thanks Robin. You mean to say as a Withholding Agent we are required to report Sales Proceeds on the Form 1042S?
Expert:  Robin D. replied 1 year ago.

Yes, if the conduct is effectively connected with the conduct of a trade or business in the United States.

Expert:  Robin D. replied 1 year ago.

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