What is the IRS classification of taxpayers for US Tax Purposes?
Classification of Taxpayers for U.S. Tax Purposes
The IRS Tax Code treats U.S. persons and foreign persons differently for tax purposes. Clearly, it is important to determine the differences between the two types of taxpayers.
What is a United States Person?
The IRS has defined the term ''United States person'' as follows:
* A citizen or resident of the United States.
* A domestic partnership.
* A domestic corporation.
* Any estate other than a foreign estate.
* Any trust if:
- A court within the United States is able to exercise primary supervision over the administration of the trust, and
- One or more United States persons have the authority to control all substantial decisions of the trust.
* Any other person that is not a foreign person.
What is a Foreign Persons
The IRS has defined a "foreign person" as follows:
* Nonresident alien individual.
* Foreign corporation.
* Foreign partnership.
* Foreign trust.
* A foreign estate.
* Any other person that is not a U.S. person.
A U.S. branch of a foreign corporation or partnership will be classified as a foreign person.