A foreign partner says they have losses elsewhere and wants us to reduce 1446 withholding using Form 8804-C. Are we required to accept it?
One of our foreign partners has other U.S. items that they say will offset their share of our effectively connected taxable income, and they sent us Form 8804-C to reduce the partnership-level withholding. The partner's tax logic may be fine, but our concern is whether the partnership is obligated to honor the form or whether we are allowed to ignore it if we do not want to carry that extra review risk.
The real issue is control of the withholding file. If we can choose whether to rely on the certificate, that is very different from being forced to accept it every time a partner claims they have deductions or losses elsewhere.
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