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To implement regulations that completely revise the withholding and reporting of cross-border payments of U.S. source income, the IRS has begun signing qualified intermediary agreements for hundreds of financial institutions. The effective date is January 1, 2001.
These agreements simplify tax withholding and information reporting procedures for foreign financial institutions. In 1998, for example, payments to foreign persons exceeded $124 billion, reported on 2.4 million information returns. The amount of tax totaled $2.4 billion.
The Service says that it has already approved many foreign financial institutions to be qualified intermediaries. The qualified...