Dick wrote:

- quote -

Dick, the times they are a'changing. Not like the (good)
old days when we (me included) made sure to use only old
bills to pay our agents during the Cold War. These days,
American dollars are the "lingua franca" of downtown Bagdad,
and probably up thar in Mosul, too.

Cheer$,
Harlan LUnsford, EA in LA

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- quote -

Actually, it's not. Some where in the IRC sections numbered
in the 870's, I think this actually appears as statute.

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- quote -

Let's see: A reward for information leading to the arrest,
capture, conviction, etc., etc. paid to a US citizen or
resident alien in the US is not self-employment income nor
is it treated as taxable compensation. It winds up be
treated as an award: Line 21 Other Income. In other words,
it is not compensation for personal services rendered that
would be subject to employment taxes. (Exception: a bounty
hunter would have to treat the reward as self-employment
income, as the bounty hunter is in the business!)

Why would you presume that a reward to an NRA would
magically become compensation for services and become
non-US source income?

Alan
http://taxtopics.net

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- quote -

Pure and simple: This reward is compensation for services to
a non-resident alien and is not includible in U.S. income for
tax purposes. Also see Section 1441 where it states that the
Secretary may promulgate rules for compensation to NRA's.

Not paying your informants in full with nice clean crisp bills
is a good way to permanently impair your information supply.
In plain English, OFS or outright {expletive deleted} stupid.

Dick

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- quote -

IRS Regulation 1.863-1(d)(2)(i) relating to awards and prizes
makes the payment US source income. This assumes that the
reward is treated as an award or prize and not compensation
for services rendered in Iraq.

Alan
http://taxtopics.net

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- quote -

Do you have a cite for this?

- quote -

So if Microsoft hires Iraqis who has never been outside of
Iraq to work in Iraq, are you suggesting that Microsoft has
to withhold U.S. Federal Income Taxes?

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- quote -

.....Because the British system isn't the U.S.'s system.
Different system; different answer.

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- quote -

That's very true, of course. Still if memory serves (and
yes, I KNOW that sometimes it don't), embassy employees in
native country are by treaty subject to their native land's
taxes only.

Cheer$,
Harlan Lunsford, EA in LA

p.s. Maybe next year in London I'll personally research the
question by visiting our embassy, making part of my air fare
tax deductible. ??

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- quote -

I disagree with regard to source: Payments by the U.S.
Government ARE U.S. sourced regardless of where the
recipient lives. As far as taxability, all income [from
sources within the U.S.] is taxable unless specifically
exempted, and I see no specific exemption that applies.

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- quote -

I don't understand the difference. If the British Secretary
working in our London Embassy pays only local taxes, then
why shouldn't the stoolie? If I understand your statement
(always a tenuous assumption when taxes are involved) it
would seem that the Londoner working in IN the US would be a
much better candidate for grabbing the money. Although I
would assume that the various embassy treaties cover that.

--
I'd love to discuss the matter further, but I'm much too
busy trying to cure cancer by playing fantasy baseball.
---fundoc on mw

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- quote -

Just like any other employee in the UK, subject to British
taxes and the regulations of the Inland Revenue. (Not
subject to US taxes of course.)

Cheer$,
Harlan Lunsford, EA in LA

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- quote -

This is off on a tangent and more curiosity than anything
else, but how are the taxes handled for local US government
employees oversees? For instance, a Brit working as a
secretary in the US embassy in London.

--
"Congress is just a place where we send mediocre men to be
Earl Scheib'ed into looking kinda vaguely consequential."
-Dennis Miller

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hfs2 wrote:

- quote -

If the recipient(s) are not US Citizens or not US Resident
Aliens the payment would be free of all US Taxes.


--
Frederick E. Jorden http://Tax-Accounting-Payroll.com
7825 Midlothian Tpk - 207 Richmond, VA 23235-5247 EMAIL knowtax[at]bigfoot.com
(804) 320-6210 FAX (804) 320-6211

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