Recently, I’ve had a handful of clients send me e-mails that include this request from foreign businesses that they will be working with:
As we have previously informed you, you will be receiving honorarium for your lectures. To pay you the full amount, we will be needing you to give us certificates of residence the IRS will issue. This document will be necessary to avoid double taxation. It may take more than a month to obtain this document, so we would like you to make your application as soon as possible.
After doing some research, we determined that the taxpayer is being asked to obtain a Form 6166, Certificate of Residency, from the IRS. In order to get the IRS to prepare a Form 6166, you need to complete and submit a Form 8802.
Here is information provided by the IRS about the Certificate of Residency:
Form 6166 – Certification of U.S. Tax Residency
Information on Completing the Form 8802, Application for United States Residency Certification
Many U.S. treaty partners require the IRS to certify that the person claiming treaty benefits is a resident of the United States for federal tax purposes. The IRS provides this residency certification on Form 6166, a letter of U.S. residency certification.
The Internal Revenue Service (IRS) procedure for requesting a certificate of residency (Form 6166) from the Philadelphia Accounts Management Center is the submission ofForm 8802, Application for United States Residency Certification (PDF). Use of the Form 8802 is mandatory.
Form 6166 is a letter printed on U.S. Department of Treasury stationery certifying that the individuals or entities listed are residents of the United States for purposes of the income tax laws of the United States. You may use this form to claim income tax treaty benefits and certain other tax benefits in foreign countries. Please refer to the instructions for Form 8802.
Some additional information will also be required in order to obtain certification under the new procedures. This information is generally set forth in the Instructions to Form 8802 (PDF). As the IRS gains experience with processing applications using Form 8802, it may update the Form and Instructions accordingly.
User Fee
A user fee will be charged to process all Forms 8802 received with a postmark date on or after November 1, 2006.
Since it appears that many foreign business are now looking for you to provide them with a Form 6166, and it takes at least a month to obtain this form, make sure to submit the Form 8802 with the IRS as soon as you know that you’ll be heading abroad to earn some income. If you need help completing this form, please let us know.