The IRS recently issued an International Practice Unit (IPU) that outlines for its examiners the general rules for determining the source of fixed, determinable, annual or periodical (FDAP) income.
The tax agency stated that source determination is “critically important,” as the U.S. only has jurisdiction to tax FDAP income sourced to the U.S. A withholding agent that is unable to establish the source of FDAP income would generally be required to presume the income is U.S. sourced and obliged to withhold tax. (more…)