U.S. Residency Certification (For Tax Purposes)
U.S. individuals or entities often need to obtain the letter of U.S. residency certification (Form 6166) from Internal Revenue Service (IRS). Such certificates are submitted to their foreign withholding tax agents or their company representatives in the foreign country for the following reasons:
- To claim benefits possible under tax treaty between U.S. and the foreign country
- To obtain an exemption from a VAT imposed by the foreign country.
More information on Tax Treaties between U.S. and foreign countries can be found on U.S. Department of Treasury website via this link or in IRS Publication 515 "Withholding of Tax on Nonresident Aliens and Foreign Entities" (commonly referred to as "Tax Treaty Tables") via this link.
Form 6166 is a computer-generated letter printed on the U.S. Department of Treasury letterhead with the facsimile signature of the Field Director, Philadelphia Accounts Management Center. To obtain Form 6166, one must fill out the Form 8802.
More information on this topic and instructions how to fill out Form 8802 can be found on IRS website via this link.
Recommended Procedure for Tax Certificates of U.S. Residency
As USA is a party to the Hague Apostille Convention of October 5, 1961, the Tax Certificates of U.S. Residency (Forms 6166) often need to be apostilled for use in countries that are also parties to the Convention. However, if the country of the intended use is not a party to the Convention, these Certificates need to be legalized via the chain legalization process. The below is the recommended procedure for individuals or entities to submit their Tax Certificates in proper order with local specifics taken into account in advance:
- Review the tax treaty information using the links above and talk to your tax agents and/or your company representatives in the foreign country to finalize specific local requirements for the format of the Certificate. For example, if the language of the foreign country is not English, these Certificates often need to obtain certified and notarized translation either in the USA or in the foreign country. The translation can be done either before apostille/legalization or after. Additional requirements may be raised by foreign tax authorities for binding/sealing of multiple pages.
- Decide when you need the actual Certificate in its final form to be submitted in the foreign country as it takes time to receive the original Certificates from IRS and pass through all the steps below. Have a plan in place to allow some leeway in case if you have to resubmit it to the foreign tax authorities after initial rejection. Your tax situation may heavily depend on the timing of the submission as you want to avoid any tax litigation with the foreign government. IRS states that you need to apply 45 days before you need it from them, and that they would contact you after 30 days to notify you of a delay. Also, for the current year, your application has to be postmarked on/after December 1 of the previous year.
- Decide how many Forms 6166 you will need as Form 8802 was amended to include an "Additional Request" box which when checked will indicate to IRS official processing your application that your tax status as a U.S. resident was previously approved, and that IRS has your information on file. Please also see next item about the user fee. IRS simplified the process for individuals/entities that need several letters of residency so that they do not have to submit lots of information several times (to show business structure or entity classification). However, certain criteria and limitation apply and can be found here http://www.irs.gov/instructions/i8802/ch01.html
- Fill our Form 8802 using the Instructions in this link http://www.irs.gov/instructions/i8802/index.html and pay the user fee of US$85 per application, regardless of the number of Certificates requested. I.e., if you requested several Forms 6166 on a single Form 8802, then no need to pay again the user fee. Your sending options will depend on how you paid your fee and can be found here http://www.irs.gov/instructions/i8802/ch01.html#d0e93
- You can call +1 (267) 941-1000 (not a toll free number) and select the U.S. residency option if you have any questions regarding your application.
- After receiving the original IRS letter, you may need to go to interpreter and notary (depending on the results of Item 1 above) for certified and notarized translation of the document with proper binding/sealing arrangement that should satisfy the foreign tax authorities.
- The document is ready for apostille or authentication at the U.S. Department of State in Washington, DC. You can skip Step 6 above if it is not required in the foreign country.
- After apostille, the document should be accepted by the foreign country (if it is party to The Hague Apostille Convention) without any additional requirements. However, if the foreign country is not a party to the Convention, then the Certificate (after authentication) can be legalized at a foreign Embassy/Consulate.
- After legalization, you can send it to your tax agents or representatives of your company in the foreign country.
- Often you would be advised to scan and to email your tax agents or representatives of your company in the foreign country the actual Certificate in its final form prior sending it via international courier so that they can start the process with the tax authorities or let you know of any deficiencies. After shipping it, you can send them the airway bill information to ensure they do receive it on time as often customs clearance may "eat up" your time leeway above (Step 2).
Canada Legalization Services via its sister company in the USA called "WDC Apostille & Legalizaion Services" can assist individuals and companies in the USA whenever authentication/apostille at the US Department of State or chain consular legalization at foreign Embassies/Consulates are needed. We can also assist with certification at the Secretary of State level (if clients cannot for some reason do that themselves). Please contact us or request a quote if you are interested in such services.