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Employing a Foreigner Independent Contractors

Saginaw, MI |

If my company is hiring a foreigner as an independent contractor (hereinafter "IC") to do projects, do my company send a 1099-MISC to the foreigner IC at the end-of-the-year, if the foreigner IC is compensated for $600 or more?

*ADDITIONAL INFORMATION: The foreigner IC will be working with there own equipment and in there own country. All rights for projects will be my property of my company*

Attorney Answers 3


  1. Best answer

    You might want to give consideration, too, to the legal interpretation of this arrangement in the country where the work will be performed.


  2. Yes, there are also other forms the foreigner must fill out to indicate that US taxes do not need to be withheld. http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Reporting-Payments-to-Independent-Contractors

    See this link.

    This answer is based on general legal principles only and is not intended to provide specific legal advice. This answer is for informational purposes only and does not constitute the formation of a lawyer-client relationship. Any reader of this answer should not make decisions based upon in without first directly consulting with an attorney


  3. Few thoughts;

    1. Does your contract have an arbitration clause, in case the contractor does not give you the IP rights or later tries to dispute ownership of the IP rights ?
    2. Which country is this ? Some countries where the US does not have foreign relations or has cut off relations are very complicated to do business in. (for eg. Cuba)
    3. If there is IP being generated - you should have a separate IP agreement, with a US choice of law clause, and a US based enforcement mechanism. Most countries that are signatories to the NY Convention recognize that IP rights are non-arbitrable - accordingly, it always helps to have separate agreements.

    Of course, it comes down to how much money is involved - I would suggest that if you have more than $50000 (value of the IP) at stake - hire a lawyer. Not only does it ensure that everything goes smoothly - it also hedges your risk.

    IRS CIRCULAR 230 DISCLOSURE: To comply with requirements imposed by the Department of the  Treasury,  we  inform  you  that  any  U.S.  tax  advice  contained  in  this  communication  (including  any attachments) is not intended or written by the practitioner to be used, and that it cannot be used by any taxpayer,  for  the  purpose  of  (i)  avoiding  penalties  that  may  be  imposed  on  the  taxpayer,  and  (ii) supporting the promotion or marketing of any transactions or matters addressed herein. 

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