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


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.


This question was answered by COKALA Tax Information Reporting Solutions, LLC, a 3rd party, independent advisory services firm offering experienced and practical help for tax regulatory compliance for Forms W-9, W-8, W-2, 1099, 1098, 5498, 945, 1042, 1042-S, and state reporting. You can learn more about them at

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