We are paying a non-resident alien for services at my company. The general rule is that you must withhold 30% to make sure the IRS gets their share. However, the 30% withholding can be overruled by tax treaty, which was the case in this instance. Luckily we caught it in time, because to file for a refund after the fact requires the following:
- File a SS-5, a request to be given a social security number. Now the interesting part is as a non-resident alien, you are not eligible for a SSN. However the IRS does not trust you in this- you must file a SS-5, and receive a rejection notice, which states “silly foriegner, you can’t have one of those”. This takes 2-3 months.
- once you have the rejection notice you need to submit that with an application for an “Individual Tax ID” or ITID. This is done on a form W-7.
- Then you are given a tax ID. Again a few months pass.
- Then you must file a Form 8233 asking the IRS to agree that indeed you are a non-resident alien, you do not have operations in the US, and are covered by a tax treaty.
All to get a measly $1000…