IRS Introduces Simplified US Tax Certification Procedure

by Mike Godfrey, Tax-News.com, London

10 June 2004

A new tax form has been introduced by the Internal Revenue Service that is designed to make it easier for US individuals and businesses to establish that they are entitled to the lower foreign tax rates provided by US income tax treaties.

The United States has tax treaties with many countries, which generally reduce the withholding tax rate for income paid to US-resident citizens and businesses investing or operating in those countries.

Beginning July 5, taxpayers who need proof of US residence to qualify for lower treaty rates while working or investing overseas must use Form 8802. As in the past, IRS will then issue a letter that confirms the tax status of the taxpayer for the purposes of claiming treaty benefits.

The new Form 8802 replaces the current procedure, which requires the requestor to write a letter to the IRS.

“Sometimes the letters we get are incomplete,” explained Commissioner Mark W. Everson. “The new form is designed to streamline the process for these certification requests because the form asks for everything we need.”

The IRS issued more than 1.5 million residency certifications in 2003 and is expecting to issue nearly 3 million for 2004, largely because of the increase in investment by US citizens overseas.

Although the mandatory use of the form does not become effective until July, the IRS will accept and process the new form immediately.

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