All compensatory payments made to international short-term visitors or independent contractors are taxable at 30%. Some countries have tax treaty agreements with the United States that exempt an individual from that tax.

The existence of a tax treaty between the U.S. and a visitor's home country does not guarantee that the visitor may take advantage of any benefits. Entry into the U.S. on the wrong visa (even if later corrected by appeal to USCIS) or trips to the U.S. on a different visa in a previous year can disqualify a visitor from the benefits of the treaty.

Tax treaties may specify limits on exemptions. An individual may be exempt for a certain period or for a certain amount of earnings. In a very few cases, staying longer than the exempt period or earning more money than the exemption allows can have severe penalties.

If Whitman rejects the exemption application, international visitors may be able to appeal directly to the IRS. This appeal may be part of filing a 1040NR, or it may be a separate process. Whitman staff cannot get involved in individual appeals directly to theIRS. International visitors wishing to appeal for a withholding exemption should consult a tax lawyer or their local IRS office for assistance.

How to Apply for Tax Treaty Benefits:

The department should have the visitor complete Form 8233, Part 1 and submit the form with the disbursement voucher. The department should also attach copies of the following documentation:

1. Copy of the I-94 Departure Card
2. Copy of the current U.S. visa page from the visitor's passport (if applicable).
3. Copy of the identification page of the passport
4. Visitor's U.S. social security card (SSN) or individual taxpayer identification card (ITIN), or proof that the visitor has submitted an application for one of these numbers. If the visitor does not have a US tax ID or refuses to apply for one, they are not eligible to apply for tax treaty benefits.
5. Copy of the visitor's I-20 (for F-1 students) or DS-2019 (for J-1 visa holders).
6. For J-1 visa holders only: Letter of permission from sponsoring university if other than IU.

When the Business Office receives the signed Form 8233, the form is sent to the IRS. There is a waiting period of ten calendar days. If IRS does not reject the form in that time, the Business Office authorizes a reduction in the visitor's withholding. If the treaty is rejected, the employee's income will be taxed at 30%.