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Bob is a French citizen is a tax resident and permanent resident of the United States. Alice is not a U.S. person and works only outside the U.S.

If Bob pays Alice for some work she performed, is it required for Bob to keep a Form W-8BEN (which Alice would complete and give to Bob)?


I'm reading conflicting information. https://ttlc.intuit.com/questions/2428027-do-i-have-to-prepare-a-1099-misc-for-a-foreign-contractor-who-performed-services-related-to-a-foreign-rental-property (mirror) seems to say that the W-8BEN is optional:

As long as the foreign contractor is not a U.S. person and the services are wholly performed outside the U.S., then no Form 1099 is required and no withholding is required.

However (Treas. Reg. §1.1441-1(b)(3)), it is generally easier to ask them to complete a Form W-8BEN. By signing Form W-8BEN, the foreign contractor is certifying that he or she is not a U.S. person.

The Form W-8BEN is not filed with the I.R.S. It is kept on file with the U.S. payor in case the U.S. payor is audited. If audited, the Form W-8BEN supports why no Form 1099 was issued and why no tax was withheld.

(my understanding of this quote is that the form W-8BEN can be used for the audit but it is not required and other types of evidence could be provided.)

whereas https://www.kahnlitwin.com/news/articles/Reporting-U.S.-Business-Payments-To-Foreign-Individuals-for-Services-Perfor (mirror) says:

Form W-8 is not required to be filed with the IRS but is required to be kept by the U.S. payor to support the foreign contractor’s representation of their residency and whether withholding was required. Note this documentation is crucial to have in case your company is audited by IRS.

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