No Refund for Employers on Some Overseas Worker Withholding: IRS

Jan. 14, 2022, 6:25 PM

An employer can’t get a subsequent refund of withholding taxes it pays under special arrangements often used for employees working in foreign countries, according to a memo released Friday by the IRS’s Office of Chief Counsel.

The case concerns “tax equalization” programs, which are intended to prevent a foreign assignment from having any effect on an employee’s tax liability. Under the arrangement, the pay for an employee working overseas is reduced, and in exchange the employer pays the employee’s tax withholding out of its own funds rather than deducting it from the employee’s wages.

  • The taxes withheld are ultimately deemed ...

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