With the 2010 tax season in our collective rear view mirrors, it’s time once again to start the journey into the next one.  Our mission at Thomson Reuters is to assist you each step along the way.

In January, 2011, a revised Form W-9 replaced the 2007 version which was in use at the time. Requesters of payee tax ID information should only use the 2011 version for new solicitations. Prior solicitations that used the older form version do not have to be replaced.

Earlier this year, the IRS issued a series of Frequently Asked Questions explaining rules for cost basis reporting by brokers in 2011 (2012 for mutual fund shares and stock in dividend reinvestment plans) under IRC Sec. 6045(g).

The Affordable Care Act required employers to report the cost of health coverage under an employer-sponsored group health plan annually on Form W-2.

In IRS Notice 2011-42 issued in May, 2011, the IRS provided interim guidance for "third party settlement organizations" (TPSO) in regard to backup withholding on payments to its participating payees.

On April 14, 2011, the President signed H.R. 4, the "Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011." This new law retroactively repeals unpopular Form 1099 information reporting rules added by 2010 legislation.

On April 14 President Obama signed into law the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011.

On April 5, 2011, the Senate passed H.R. 4 (the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011), a bill that fully repeals the expanded Form 1099 information reporting rules passed as part of the Small Business Jobs Act of 2010 and the Patient Protection and Affordable Care Act (PPACA).  The Act is now cleared for President Obama's expected signature.

A foreign business enterprise without a fixed place of business in the United States may nevertheless have a U.S. permanent establishment (PE) based on services provided in the United States on its behalf. This can occur in one of two ways: 1) the sales activities for the foreign enterprise are carried on in the United States through a dependent agent (called an "agency PE") or 2) the enterprise's contracted-for non-sales services (called "enterprise services") carried on in the United States cause the enterprise to have a PE in the United States as that term is defined in the Permanent Establishment Article of the applicable tax treaty.

Q. Our organization has a services contract with a newly-formed Canadian company. They will send the same person to our site in Chicago during the calendar year for an estimated 150 days. He will also be providing services at another U.S. site for another company for an estimated 60 days during the calendar year. He has told me that as a start-up, they don't have many clients yet and that the value of our contract alone will bring in three times the amount of revenue they expect to receive from all their other business for the year combined. Since he will only be at our site for 150 days, though, we do not believe the company will have a permanent U.S. establishment and we plan to exempt the entire amount from tax under the Business Profits article. Is this correct?

Registration is nearly closed for April's Nonresident Alien and Foreign Vendor Tax Compliance Training taking place April 24 - 27 at the Hyatt Regency, Cambridge, MA. The training features over forty sessions divided into a two-day lecture track and a two-day software track allowing you to attend two days or all four days depending on your needs.

Learn how International Tax Navigator can help improve your nonresident alien tax processing by viewing a free web demonstration on May 16.

The IRS is on the hunt for corporations who are not properly complying with rules for withholding and reporting on payments to foreign vendors and individuals. If you make payments for services, royalties and licensing fees, rents, interest, and other payments, this webinar will show how W-8 E-Compliance can help you.

Paula N. Singer, Esq., Thomson Reuters practice leader, will present a number of sessions on nonresident alien and foreign vendor tax compliance this spring during webcasts, training seminars and trade shows.

Foreign business enterprises are subject to U.S. income taxes on net business income that is effectively connected with the conduct of a U.S. trade or business. Foreign enterprises may avoid 30 percent withholding (called "NRA Withholding") on their net business profits by submitting a valid Form W-8ECI to the payer for the effectively connected income (ECI) described on line 9 of the form. To be valid, the form must include a U.S. EIN (which begins with "98" for a foreign organization). Form W-8ECI cautions that the organization must submit a U.S. tax return. This return must include all of the organization's effectively connected income whether or not reported by a payer on an information return. (For more information, see "Withholding on U.S. Business Income of Foreign Vendors," September/October 2011 article.)

Q. I am a J-1 Professor from the UK in my first visit to the United States. I gave a lecture and will be paid an honorarium as allowed under my J-1 program with my university. I have been unable to find the Independent Contractor Article in the treaty with the UK. Is there one? If not can I use Form W-8ECI to avoid withholding on my honorarium?

Registration is now open for April's Nonresident Alien and Foreign Vendor Tax Compliance Training taking place April 24 - 27 at the Hyatt Regency, Cambridge, MA. The training features over forty sessions divided into a two-day lecture track and a two-day software track allowing you to attend two days or all four days depending on your needs.

Paula Singer's latest article, "A Proposal for Taking the Complexities out of U.S. Retirement Distributions to Foreign Nationals," co-authored with Professor Cynthia Blum of Rutgers Law School, was published by the Florida Tax Review, the law review of the graduate tax program at the University of Florida. This is the second law review article by the co-authors. The first was "A Coherent Policy for U.S. Residence-Based Taxation of Individuals" published in 2008 by the Vanderbilt Journal of Transnational Law.