BU 003 - Foreign Service Providers

The Internal Revenue Service has issued final reporting regulations required under the Foreign Account Tax Compliance Act (FATCA).

The new regulations require additional reporting requirements for U.S. entities who conduct business with a foreign entity or person (payee) for services performed on U.S. soil.

The new regulations require foreign payees performing services on U.S. soil to register with the U.S Treasury Department. In addition, the foreign payee must provide the appropriate form W-8BEN or W-8BEN-E to the entity it is doing business with in the U.S.

If the foreign payee does not register with the Treasury Department, the entity for which the services were performed is required to withhold and remit to the Federal Government a penalty of 30% of the amount due to the foreign payee. Additionally, if the foreign payee does not complete the appropriate W-8 form, backup tax withholding of up to an additional 30% will be withheld from their remittance.

In order to avoid the withholding, penalty, and the related record keeping that it would create, please contact the Seton Hill Business Office before entering into any agreements with foreign persons or entities for services that will be performed on U.S soil.

This notification is being sent to you for information purposes. At the present time, the University is not conducting business with any foreign (payee) providing services on U.S. soil. However, the possibility exists that Seton Hill could enter into this type of business relationship in the future. For example; visiting scholars or lecturers who are teaching in the United States, and who are being paid for their services, would be subject to the new regulations.