Skip to main content

U.S. Tax Information for Foreign Vendors

The Internal Revenue Service requires that all payments made to foreign vendors be made in accordance with IRS regulations.

The Internal Revenue Service requires that all payments made to foreign vendors be made in accordance with IRS regulations. These regulations require that, when services are provided inside the U.S., taxes be withheld from payments made to foreign vendors unless the income is exempt under a provision of a tax treaty between the foreign vendor's country and the U.S.

To avoid withholding, foreign vendors that are business entities must have a U.S. employer identification number and must submit a properly completed IRS Form W-8BEN, W-8ECI, W-8EXP or W-8IMY, as appropriate. Foreign vendors that are individuals who wish to avoid withholding must be eligible to claim a tax treaty exemption by having a Social Security number or individual taxpayer identification number and must submit a completed IRS Form 8233 for certification.

Payments made to foreign vendors will be subject to U.S. federal income tax withholding of 30 percent unless:

  • The appropriate IRS forms have been completed and accepted by MidAmerican Energy Company as valid, and
  • Payments made to the foreign vendor are
    • Exempt (or subject to a lower withholding rate) due to a tax treaty,
    • Effectively connected with the conduct of a trade or business in the U.S. (i.e., the vendor files a U.S. income tax return. This applies to payments to foreign business entities only), or
    • Made to a foreign entity with U.S. tax-exempt status.

Payments made to foreign vendors under this policy are required by the IRS to be reported annually on IRS Form 1042-S (Foreign Person's U.S. Source Income Subject to Withholding). Reporting is required regardless of whether or not withholding is required. A copy of the form is sent to the foreign vendor at the time it is filed with the IRS. The IRS requires that Form 1042-S be filed by March 15 following the calendar year in which payments were made.

IRS Publication 515 has additional information about these tax requirements.

Related Information

All foreign vendors receiving payments for services performed in the U.S. (as defined elsewhere) are required to complete an IRS Form W-8 (W-8BEN, W-8ECI, W-8EXP, W-8IMY or 8233) unless one is already on file with MidAmerican Energy Company. All W-8 forms, Form 8233 and all instructions are available on the IRS website.

If the U.S. does not have a tax treaty with the foreign vendor's country of residence that exempts payments from U.S. federal income tax withholding, or if a valid Form W-8 or 8233 has not been correctly completed before payment is processed, 30 percent of the total payment to the foreign vendor may be withheld by MidAmerican Energy and remitted to the IRS.

A list of existing tax treaties between the U.S. and other countries is found in IRS Publication 901, U.S. Tax Treaties.

Based on a vendor's completed Form W-8 and/or Form 8233 or a vendor's failure to submit the appropriate form, MidAmerican Energy will determine whether withholding is required and at what percentage. If the payment is subject to 30 percent federal tax withholding, MidAmerican Energy will pay 70 percent of the approved portion of the requested amount and will submit the 30 percent to the IRS. Foreign vendors will be responsible for filing the necessary documents with the IRS to obtain a refund of the 30 percent, if permitted.

In order to be valid for tax treaty exemption, both the Form W-8 and Form 8233 (for individuals) require a U.S. taxpayer identification number.