A 6041 Reportable Payment is
a payment to a foreign person or an alien. We know this because:
- We know that regulation 31.3406(d)-1 tells us to look
at IRC section 6109 and its regulation "to determine whose
taxpayer identification number should be provided";
- We know that regulation 1.6041-6 tells us to look at
IRC section 6109 and its regulation "for rules requiring the
inclusion of identifying numbers in Form 1099"
- We know that IRC section 6109 and its regulation
require only nonresident aliens and foreign persons to furnish their
TIN (taxpayer identification numbers) to other persons for the purposes
of reporting "reportable payments".
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Does it stand to reason, If
some item of revenue is NOT taxed, it would NOT be a "reportable payment" when paid?
In other words, does it stand to reason, If some item of revenue IS
taxed, it WOULD be a "reportable
payment" when paid?
Does it stand to reason, If
some item of revenue is NOT taxed,
there would be NO need to backup
withhold such a tax? In other words,
Does it stand to reason, that only items actually taxed would actually
be subject to backup withholding?
As shown earlier in this
chapter, we now know that backup
withholding only applies to "reportable
payments".
Please notice the repeat of
the bold faced highlighted words in the next four IRC sections.
TITLE 26 - INTERNAL
REVENUE CODE
Subtitle F - Procedure and Administration
CHAPTER 61 - INFORMATION AND RETURNS
Subchapter A - Returns and Records
PART III - INFORMATION RETURNS
Subpart B - Information Concerning Transactions With Other Persons
Sec. 6041. Information at source
(a) Payments of $600 or more
All persons engaged in a trade or business and making payment in the
course of such trade or business to another person, of rent, salaries,
wages, premiums, annuities, compensations, remunerations, emoluments,
or other fixed or determinable gains, profits, and income...
shall render a true and accurate return to
the Secretary, under such regulations and in such form and manner and
to such extent as may be prescribed by the Secretary, setting forth the
amount of such gains, profits, and income, and the name and address of
the recipient of such payment. |
The IRC section above deals
with information at source, which is where the duty to report "reportable payments" attaches to the
"reportable payment".
TITLE 26 - INTERNAL
REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter C - Corporate Distributions and Adjustments
PART I - DISTRIBUTIONS BY CORPORATIONS
Subpart A - Effects on Recipients
Sec. 306. Dispositions of certain stock
(f) Source of gain
The amount treated
under subsection (a)(1)(A) as ordinary income shall, for purposes of
part I of subchapter N (sec. 861 and following, relating to
determination of sources of income), be treated as derived from the
same source as would have been the source if money had been received
from the corporation as a dividend at the time of the distribution of
such stock. If under the preceding sentence such amount is
determined to be derived from sources within the United States, such
amount shall be considered to be fixed
or determinable annual or periodical gains, profits, and income within the meaning of
section 871(a) or section 881(a), as the case may be.
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TITLE 26 - INTERNAL
REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter N - Tax Based on Income From Sources Within or Without the
United States
PART II - NONRESIDENT ALIENS AND
FOREIGN CORPORATIONS
Subpart A - Nonresident Alien
Individuals
Sec. 871. Tax on nonresident alien individuals
(a) Income not
connected with United States business - 30 percent tax
(1) Income other than capital gains
Except as provided in subsection (h), there is hereby imposed for each
taxable year a tax of 30 percent of the amount received from sources
within the United States by a nonresident alien individual as -
(A) interest (other than original issue discount as defined in section
1273), dividends, rents, salaries,
wages, premiums, annuities, compensations, remunerations, emoluments,
and other fixed or determinable annual or periodical gains, profits,
and income, ...
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TITLE 26 - INTERNAL
REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter N - Tax Based on Income From Sources Within or Without
the United States
PART II - NONRESIDENT ALIENS AND
FOREIGN CORPORATIONS
Subpart B - Foreign Corporations
Sec. 881. Tax on income of foreign corporations
not connected with United States business
(a) Imposition of
tax
Except as provided in subsection (c), there is hereby imposed for each
taxable year a tax of 30 percent of the amount received from sources
within the United States by a foreign corporation as -
(1) interest (other than original issue discount as defined in section
1273), dividends, rents, salaries,
wages, premiums, annuities, compensations, remunerations, emoluments,
and other fixed or determinable annual or periodical gains, profits,
and income, ...
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Let me highlight something I
find funny, and telling, by copying a section of the above paragraph
and then deleting extraneous words to get to the subject matter:
Sec. 881. Tax on income of
foreign corporations
(a) Imposition of tax
... there is hereby imposed ... a tax of 30 percent of the amount received ... by a foreign corporation as -
(1)... salaries, wages, remunerations, emoluments,
...
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