IRS increasing focus on Form 1042-S compliance

How confident are you that your finance staff is accurately and timely filing Forms 1042-S? IRS has its eye on those information returns.

Recently, the Treasury Inspector General for Tax Administration (TIGTA) released a performance audit, looking at the Service’s processes for Forms 1042-S.

It found that over the past several years, IRS’s desire to better enforce 1042-S compliance has increased greatly. For example, in 2018, IRS created a new enforcement campaign for Form 1042-S compliance and updated its procedures manual for Form 1042-S audits. All in all, the Service knows how complex 1042-S reporting can be, and it’s looking to close compliance gaps, say the experts at Refinitiv.

For CFOs, more IRS scrutiny means more reason to ensure your finance staff is following IRS’s Form 1042-S requirements to a T.  

Shifting focus

Since most companies bring on more U.S. workers versus foreign workers, finance pros often put a lot of emphasis on 1099 compliance.

But since reporting requirements for nonresident aliens are lesser known and arguably more complex (e.g., there’s only one W-9 for U.S. vendors but five different W-8s for foreign vendors), companies dealing with foreign workers need to give these tax forms a just as close – if not closer – look.

Even finance teams who don’t work with many nonresident aliens yet should familiarize themselves with the all requirements. Cross-border business relationships are only becoming more and more common, and you never know when your company will suddenly need to foster them.  

Need more information?

Premier Learning Solutions is offering a workshop, Forms W-8 & 1042-S: IRS Reporting for Nonresident Aliens, available on-demand.

Some of the topics it covers include:

• Form 1042-S and related forms for filing and reporting backup withholding
• a review of the latest versions of the five Forms W-8
• how to determine whether you’re working with nonresident aliens
• best practices for managing nonresident alien information reporting and backup withholding, and
• how to avoid penalties for under-withholding and failure to report.

The speaker is Miles Hutchinson, a CGMA, experienced businessman, professional speaker and consultant. He’s presented seminars and training sessions on a myriad of business and financial topics, like financial analysis and modeling, accounting and strategic planning. In addition, Miles is recognized as an expert in regulatory reporting, payroll, sales and use tax, financial modeling and analysis, business strategy and communications.

Click here for registration and more information.