Paid tax professionals aren’t permitted to endorse or otherwise negotiate a refund check issued to a taxpayer. This is true, even if the taxpayer requests their refund be directed into the paid tax professional’s bank account or in his/her name. Failure to comply could result in an Inter REvenue Code, Section 6695(f) penalty of $510 for each tax return with no maximum penalty amount and no reasonable cause exceptions.
This brings up the point regarding companies who advertise refunds of withholding of U.S. gambling winnings and insist that the refund go directly to their office.
A qualifying non-resident employer can be certified and thus will have to withhold tax from the salary or other compensation paid to qualifying non-resident employees in Canada (to be covered in a future FAQ). This eliminates withholding taxes. Which can be a big cash flow savings. The certification will be valid for up to two calendar years.
To be eligible to be a qualifying non-resident employer, the employer must be a resident in a country that has a tax treaty with Canada. Read More
In a scathing blog published this past week, National Taxpayer Advocate Nina Olson criticized the significant roadblocks that meet nonresident aliens (“NRAs”) trying to rightfully obtain refunds of withheld tax from the IRS. The roadblocks stem from a recent general freeze by the IRS on credits claimed on Forms 1040NR, U.S. Nonresident Alien Income Tax Return, which do not match with the information provided on Forms 1042-S filed by withholding agents.
The Taxpayer Advocate is an independent office within the IRS tasked with helping people resolve tax issues with the IRS and recommending changes that will prevent future problems. It’s always interesting to hear the point of view of the office responsible for taking the IRS to task for its missteps in handling taxpayer issues. Read More