I run an online business that caters to customer all over the world. This year, a customer asked me to send them a certificate of fiscal residence, which I assume is Form 6166. According to the IRS website, this cost about $85 and almost two months to retrieve. Am I obligated to pay and obtain this form? I've asked the customer to pay for it since the $85 cost is more money then what they have paid to me? Is it wrong to ask the customer to pay for it or does the US company have to bear all the cost?
Frankly, I'm not sure what you mean by "customer". If they are hiring you, they want to know where taxes need to be paid. If they are buying goods, this would seem inapplicable.
That said, I'm no tax expert. I will change the category.
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It doesn't seem unreasonable for you to ask but I doubt that they'll pay. Depending on the customer's country of residence and the type of transaction (goods vs. services), a residency certification may be necessary to avoid their country's tax requirement that they withhold a portion of the amount they pay to you.
More broadly, you may need to change your standard terms and conditions to make it clear that you will receive the agreed-upon sales price, even after the imposition of any required tax withholding.
This answer is provided for general information only and should not be construed as legal advice. An attorney-client relationship is established only after it is established that there is no conflict of interest and the attorney and client enter into a Legal Representation Agreement.
Many U.S. treaty partners require the IRS to certify that the taxpayer claiming treaty benefits is a resident of the United States for federal tax purposes. The IRS provides this residency certification on Form 6166, a letter of U.S. residency certification. The IRS procedure for requesting a certificate of residency (Form 6166) from the Philadelphia Accounts Management Center is the submission of Form 8802. The information presented herein is for general purposes only. It is not intended to, and may not be construed as, rendering legal, tax or accounting advice. For specific advice, please consult a tax attorney in person. Good luck. Zaher Fallahi, Tax Attorney, CPA (California).
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