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Internal IRS Projects

Form 1120-F Chapter 3 and Chapter 4 Withholding

  • Rollout: November 3, 2017
  • IP&B Contact: Doug Andre or Jamie Brown
  • LB&I summary: This campaign is designed to verify withholding at source for 1120-Fs claiming refunds. To make a claim for refund or credit of estimated tax with respect to any U.S. source income withheld under chapters 3 or 4, a foreign entity must file a Form 1120-F. Before a claim for credit (refund or credit elect) is paid, the IRS must verify that withholding agents have filed the required returns (Forms 1042, 1042-S, 8804, 8805, 8288 and 8288-A). This campaign focuses upon verification of the withholding credits before the claim for refund or credit is allowed. The campaign will address noncompliance through a variety of treatment streams including, but not limited to, examinations.
  • Relevant LB&I Practice Units: “Verifying Refund Requests of IRC 1441 Withholding on FDAP Income” (September 14, 2017); “FDAP Withholding Under Chapter 3” (June 2, 2016).  

Verification of Form 1042-S Credit Claimed on Form 1040NR

  • Rollout: November 3, 2017
  • IP&B Contact: Doug Andre or Jamie Brown
  • LB&I summary: This campaign is intended to ensure the amount of withholding credits or refund/credit elect claimed on Forms 1040NR, U.S. Nonresident Alien Tax Return, is verified and whether the taxpayer has properly reported the income reflected on Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding. Before a refund is issued or credit allowed, the Internal Revenue Service verifies the withholding credits reported on the Form 1042-S. The campaign will address noncompliance through a variety of treatment streams including, but not limited to, examinations.
  • Relevant LB&I Practice Units: “Verifying Refund Requests of IRC 1441 Withholding on FDAP Income” (September 14, 2017); “FDAP Withholding Under Chapter 3” (June 2, 2016).

TEFRA Linkage Plan Strategy

  • Rollout: January 31, 2017
  • IP&B Contacts: Doug Andre, Jamie Brown, or Heléna Klumpp
  • LB&I summary: As partnerships have become larger and more complex, LB&I has regularly revised processes to assess tax on the terminal investors. Recent legal advice provides an opportunity to make significant changes to how we approach this process. This campaign focuses on developing new procedures and technology to work collaboratively with the revenue agent conducting the TEFRA partnership examination to identify, link and assess tax to the terminal investors that pose the most significant compliance risk.
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