The Internal Revenue Service has extended its hold on certain tax refunds for returns filed by nonresident aliens and other foreign taxpayers on Form 1040NR beyond the usual 180-day limit in order to give extra scrutiny to the refund claims, leaving many undocumented immigrant workers waiting up to 360 days to get the tax refunds they filed this year
The delays may also affect non-resident owners of US rental property where withholding has been applied by their management company or booking agent on rental income received on their behalf. The agents generally provide Form 1042-S to the owner – the form states the amount of rental income received and any withholding applied. This form must then accompany the non-resident tax return to the IRS for processing any refund. The IRS claims that they need additional time to review these credits “due to the complexity of some of these refund claims” and that taxpayers will be notified if additional time is needed.
To minimize any potential delay, provide your management company or booking agent with your ITIN by completing and submitting Form W-8ECI. By completing this form the non-resident owner establishes that they are not a U.S. person, that they are the beneficial owner of the income and that the income is effectively connected with the conduct of a trade or business in the United States. With this form on file your agent is not required to withhold 30% of rental income.
Reprinted with permission. For further information visitwww.hbitax.com