What This Notice Means

You indicated on your Form 1065, U.S. Return of Partnership Income, or Form 1065-B, that the partnership has foreign partners. The IRS wants to know whether you met your withholding obligation for them.

A partnership, foreign or domestic, that has income effectively connected with a U.S. trade or business must pay a withholding tax on the effectively connected taxable income it allocates to foreign partners. This is section 1446 withholding. The partnership, or its withholding agent, pays it. A partnership that owes this withholding and doesn't pay it may be liable for the tax plus penalties and interest.

If You Owe the Withholding

Complete and file the appropriate forms as the notice directs.

Partnerships that are not publicly traded:

  • Form 8804, Annual Return for Partnership Withholding Tax (Section 1446).
  • Form 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax.
  • Form 8813, Partnership Withholding Tax Payment Voucher (Section 1446).

Publicly traded partnerships:

  • Form 1042, Form 1042-T, and Form 1042-S.

If You Don't Owe the Withholding

  • Write "not liable" on the notice.
  • Don't write that you have no taxable income.
  • Send the notice to the address at the top of the notice.

If You Already Filed

Write the names of the forms you already filed on the notice and send it to the address at the top of the notice.

Don't Guess

Whether the partnership owes section 1446 withholding depends on its income and its partners. Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, covers the rules. Answering "not liable" when you are liable leaves the partnership exposed to the tax, penalties, and interest.

If you received a CP282 notice and aren't sure whether your partnership owes withholding, call us at (813) 229-7100.