Does product for resale fall under the requirement to withhold 30% if they submit a W-8BEN-E?


We consulted with COKALA Tax Information Reporting Solutions, LLC (, our guest experts on tax issues. Here is their reply:

Payments to foreign entities or individuals for goods are not subject to withholding of U.S. income tax or IRS Form 1042-S reporting. Regulations sec. 1.1441-2(b)(2)(i) establishes this exception for purposes of Internal Revenue Code chapter 3 (withholding at source) and Reg. sec. 1.1473-1(a)(4)(iii) establishes the exclusion for purposes of I.R.C. chapter 4 (FATCA). Many companies adopt a policy of not obtaining W-8 documentation from a vendor the company will pay only for products, if the company has sufficient documentation that the payments are for goods only. Just be alert for any future payments to the same vendor that are subject to the withholding and reporting requirements, such as payments for services that constitute U.S. source income.

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