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Annual license fees for software from a foreign vendor
June 29, 2023
Q. We paid an Australian vendor for annual license fees for an academic assessment that is accessed online via thumb drive. At the time of payment, we did not have a W-8BEN-E with a valid treaty claim to reduce the tax withholding rate to less than 30% or 0, so we withheld 30% from the payment. We withheld tax because we believed the income was US sourced, as we accessed the assessment from the US. The vendor is now saying we were not supposed to withhold tax. I'm questioning if we incorrectly…
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