How Do I Get a U.S. Residency Certificate?

U.S. individuals and companies that operate internally in a foreign country could be subject to withholding taxes in the foreign country. The withholding tax rate can potentially be reduced or eliminated through 1) an income tax treaty that exists between the source country and the U.S. and 2) the taxpayer is a resident of the U.S..

A U.S. resident can demonstrate U.S. tax residence classification in order to claim benefits under an income tax treaty filing Form 882 to obtain a U.S. Tax Residency Certificate (Form 6166). Any individual or entity that is treated as a U.S. resident due to citizenship, place of incorporation, holding a green card, or meeting the substantial presence test may request a Residency Certificate. However, note that the following taxpayers are not eligible to file Form 8802:

1. Taxpayers that are fiscally transparent with no U.S. partners, members, owners or beneficiaries; and
2. Taxpayers who file as nonresidents or who claim non-resident status based on a tax treaty tiebreaker provision.

The Form 8802 is typically requested for U.S. tax residents with non-U.S. source income, to prove residency in order to claim tax treaty position.

The Form 8802 confirms a foreign withholding agent that an individual or entity is a tax resident of the United States. The Form 8802 needs to be prepared and sent to the Internal Revenue Service (“IRS”) annually. In the case of a fiscally transparent entity, Form 6166 will certify that the entity, when required, filed information returns and its members, partners, beneficiaries, and owners filed required income tax returns with the IRS. It should be noted that partnerships or LLCs treated as partnerships for U.S. tax purposes are disregarded entities and are not considered U.S. residents within the meaning of the residency article of most U.S. income tax treaties. Thus, for partnerships or LLCs treated as partnerships for U.S. tax purposes, the Form 6166 that is issued by the IRS will include a list of U.S. resident partners, members and owners. Once the IRS issues a so-called “Residency Certificate,” the taxpayer can forward it to the foreign withholding agent in order to avoid or reduce a foreign withholding tax.

The application for the Form 8802 requires the following information:

1. Name, address, and Taxpayer Identification Number (“TIN”). For individuals the tax I.D. number is their social security number; for entities, it is their employer identification number (EIN). The IRS will use this tax ID number to search its records for the applicant’s previous tax returns or other such documents to confirm U.S. residency.
2. If the applicant is a fiscally transparent entity, the application for the Form 8802 must contain the following information:

A. The name and social security number of each partner, member, owner or beneficiary for which the certification is requested.

B. An IRS Power of Attorney (Form 2848 or 8821) for each partner.

3) If an application on behalf of an individual or corporation is completed by a third-party appointee, in lieu of using an IRS power of attorney, the applicant may sign the application and a written authorization will be deemed to have been provided.

4) All information on the Form 8802 is signed under penalties of perjury.

5) There is a $85 processing fee for each Form 8802.

Anthony Diosdi is one of several tax attorneys and international tax attorneys at Diosdi & Liu, LLP. Anthony focuses his practice on domestic and international tax planning for multinational companies, closely held businesses, and individuals. Anthony has written numerous articles on international tax planning and frequently provides continuing educational programs to tax professionals.

Anthony is a member of the California and Florida bars. He can be reached at 415-318-3990 or adiosdi@sftaxcounsel.com.

This article is not legal or tax advice. If you are in need of legal or tax advice, you should immediately consult a licensed attorney.