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U.S. PARTNERSHIP COMPLIANCE SERVICES
A partnership is an arrangement where parties, known as partners, agree to cooperate to advance their mutual commericial interests. Partners may be individuals, businesses and even other partnerships. Under current U.S. tax rules, a partnership's income or loss is reported on Form 1065. A partnership itself does not pay income taxes directly to the Internal Revenue Service ("IRS") but rather, the partners are taxed on their allocable share of income or loss of the partnership on their respective U.S. personal income tax returns.
The partnership must prepare and report items of income, expense and other relevant items to partners on Form K1. Partnerships with foreign, non-U.S. partners are subject to mandatory withholding done at the partnership level. A U.S. or Canadian partnership that has Effectively Connected Taxable Income ("ECTI") allocable to any non-U.S. partner must collect and remit to the IRS an amount of withholding tax equal to 35% for corporate partners and 39.6% for individual partners.
Our experienced professionals will determine the U.S. or foreign status of all parnters and will prepare all required federal and state partnership returns.