Vanderbilt Journal of Transnational Law

First Page



The exemptions available in the 1984 regulations will benefit nonresident aliens receiving compensation for personal services. The exemptions will allow nonresident aliens to receive more of their compensation while they are in the United States, and, in turn, will enable them to spend more of it in the United States. The exemptions are substantially broader and more generous than the narrow exemptions previously available. If a nonresident alien avails himself of the final payment exemption or the withholding agreement exemption, if he is to receive income from United States and foreign sources from one withholding agent, the required negotiations with the IRS may provide much needed guidance to United States withholding agents. If a nonresident alien chooses not to seek an exemption, the withholding agent must use only his own judgment to estimate gross income from United States sources and withhold thirty percent of that amount. Similarly, when a nonresident alien uses the process described in regulation 1.1441-4(b)(2) for obtaining an exemption under a treaty, a withholding agent has few guidelines on which he can rely in deciding to grant the requested exemption. Although the 1984 regulations further Congressional objectives of insuring compliance and continue the steady broadening of exemptions from section 1441 withholding requirements, they impose new responsibilities and risks on United States withholding agents who hire nonresident aliens to perform personal services.