Three forms are required for reporting and paying over tax withheld on effectively connected income allocable to foreign partners.
Form 8804, Annual Return for Partnership Withholding Tax (Section 1446).
The withholding tax liability of the partnership for its tax year is reported on Form 8804. Form 8804 is also a transmittal form for Forms 8805. Any additional withholding tax owed for the partnership's tax year is paid (in U. S. currency) with Form 8804. A Form 8805 for each foreign partner must be attached to Form 8804, whether or not any withholding tax was paid.
File Form 8804 by the 15th day of the 3rd month (4th Month for partnership tax years beginning before January 1, 2016) after the close of the partnership's tax year. However, a partnership made up of all nonresident alien partners has until the 15th day of the 6th month after the close of the partnership's tax year to file.
If you need more time to file Form 8804, you may file Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns, to request an extension. Form 7004 does not extend the time to pay the tax.
Form 8805 is used to show the amount of effectively connected taxable income and any withholding tax payments allocable to a foreign partner for the partnership's tax year. At the end of the partnership's tax year, Form 8805 must be sent to each foreign partner whether or not any withholding tax is paid. It should be delivered to the foreign partner by the due date of the partnership return (including extensions). A copy of Form 8805 for each foreign partner must also be attached to Form 8804 when it is filed with the IRS. A copy of Form 8805 must be attached to the foreign partner's U.S. income tax return to take a credit on its Form 1040NR or Form 1120- F.
Form 8813, Partnership Withholding Tax Payment Voucher (Section 1446).
This form is used to make payments of withheld tax to the United States Treasury. Payments must be made in U. S. currency by the payment dates. File Form 8813 on or before the 15th day of the 4th, 6th, 9th, and 12th months of the partnership's tax year for U.S. income tax purposes.
Instructions for Forms 8804, 8805, and 8813 provides guidance to filers of Forms 8804, 8805, and 8813 on how to pay and report section 1446 withholding tax based on effectively connected taxable income allocable to foreign partners.
Mail the voucher with a check or money order in U.S. currency payable to the "United States Treasury." Write the partnership's Employer Identification Number, tax year, and "Form 8813" on the check or money order.
File Forms 8804, 8805 and 8813 with:
Internal Revenue Service Center
P.O. Box 409101
Ogden, UT 84409
Form 8804 Penalties
A penalty may be imposed for failure to file Form 8804 when due (including extensions). The penalty for not filing Form 8804 when due is usually 5% of the unpaid tax for each month or part of a month the return is late, but not more than 25% of the unpaid tax. The penalty will not apply if the partnership can show reasonable cause for filing late.
Form 8805 Penalties
A penalty may be imposed for failure to file Form 8805 when due (including extensions) or for failure to provide complete and correct information. The amount of the penalty depends on when you file a correct Form 8805.
For a Form 8805 required to be filed before January 1, 2016, the penalty for each Form 8805 is:
$30 if you file a correct form within 30 days, with a maximum penalty of $250,000 per year ($75,000 for a small business), or
$100 if you file after 30 days or do not file a correct form, with a maximum penalty of $1,500,000 per year ($500,000 for a small business).
A small business is a business that has average annual gross receipts of not more than $5 million for the most recent 3 tax years (or for the period of its existence, if shorter) ending before the calendar year in which the Forms 8805 are due.
For a Form 8805 required to be filed after December 31, 2018, the penalty is $270 per Form 8805, with a maximum penalty of $3,339,000 per year.
Also, for a Form 8805 required to be filed before January 1, 2016, if you fail to provide a complete and correct Form 8805 to each recipient when due, a penalty of $50 for each failure may be imposed. The maximum penalty is $100,000 per year. For a Form 8805 required to be furnished after December 31, 2015, the penalty is $260 per form for failure to furnish a correct Form 8805 to a recipient, with a maximum penalty of $3,178,500 per year.
There are some situations where the penalty under section 6721 of the Internal Revenue Code is reduced or eliminated. This may apply if the partnership has average annual gross receipts of not more than $5 million during a specified period of time; corrects the failure to file within a specified period; or has a de minimis number of failures to file correct Forms 8805.
There can also be a higher penalty imposed when the failure is due to intentional disregard of the requirement to file timely correct information returns.
Please consult sections 6721, 6722, and 6724 of the Internal Revenue Code for information on penalties for the late or incomplete or incorrect filing of information returns and payee statements with the IRS. Also, refer to the Instructions for Forms 8804, 8805, and 8813 (for the year the Form 8805 is required to be filed) for other penalties that may be imposed, such as a penalty for the late payment of tax, the failure to withhold and pay over tax, etc.
A partnership that has not been assigned a U.S. Taxpayer Identification number ( TIN ) must obtain one. Normally an Employer Identification Number (EIN) is applicable. If a number has not been assigned by the due date of the first withholding tax payment, the partnership should enter the date the number was applied for on Form 8813 when making its payment. As soon as the partnership receives its TIN, it must immediately provide that number to the IRS. Refer to Employer ID Numbers (EINs).
To ensure proper crediting of the withholding tax when reporting to the IRS, the partnership must include each partner's U.S. TIN on Form 8805. If there are partners in the partnership without U.S. taxpayer identification numbers, the partnership should inform them of the need to obtain a TIN. Refer to U.S. Taxpayer Identification Number for additional information.
Note: This page contains one or more references to the Internal Revenue Code (IRC), Treasury Regulations, court cases, or other official tax guidance. References to these legal authorities are included for the convenience of those who would like to read the technical reference material. To access the applicable IRC sections, Treasury Regulations, or other official tax guidance, visit the Tax Code, Regulations, and Official Guidance page. To access any Tax Court case opinions issued after September 24, 1995, visit the Opinions Search page of the United States Tax Court.