GN 05010: Nonresident Alien Withholding Tax
TN 10 (04-97)
A. BACKGROUND
Alien residents of the U.S. Virgin Islands are not subject to alien tax withholding. IRS assumes they satisfy their U.S. tax obligations under section 28(a) of the Revised Organic Action of the Virgin Islands. This law permits an individual to meet his U.S. tax obligation by payment to the Virgin Island Treasury, rather than IRS.
B. POLICY
1. Claimant in 50 States, D.C., Guam or NMI
Assume, absent information to the contrary, a claimant is a U.S. citizen or resident and not subject to alien tax withholding.
2. Claimant in America Samoa or Puerto Rico
Assume a claimant is either a citizen of the U.S., Puerto Rico or American Samoa and is not subject to tax withholding if he was born in:
One of the 50 States;
D.C.;
American Samoa;
Guam;
NMI; or
Puerto Rico.
An alien claimant who has evidence of his lawful admission for permanent residence in the U.S. (see GN 00303.440) is a resident alien under the lawful permanent residency test.
3. Claimant in U.S. Virgin Islands
a. Claimant Born in an Area Listed in 2.a.-f.
Assume he/she is a citizen of the U.S. or the area of his birth and not subject to tax withholding.
NOTE: Show an AWSC of “1” if a code is needed.
b. Claimant Born in an Area Not Listed in 2.a.-f.
Assume he/she is a resident of the U.S. Virgin Islands.
NOTE: Show an AWSC of “3” if a code is needed.
If he later moves to an area which is not part of the U.S. for IRS purposes determine his tax status. (See GN 05010.010A.3. for a discussion of U.S. citizen status of individuals born in the U.S. Virgin Islands.)
4. Summary Chart
This chart summarizes the status of claimants in,and citizens of, American Samoa, Guam, NMI, Puerto Rico and U.S. Virgin Islands.
| Claimant Living In | Citizen of American Samoa But Not U.S. | Citizen of Guam But Not U.S. | Citizen of NMI But Not U.S. | Citizen of Puerto Rico But Not U.S. | Citizen of U.S. Virgin But Not U.S. | Alien Resident of |
| American Samoa | Not subject to alien tax | Not subject to alien tax | Not subject to alien tax | not subject to alien tax | Subject to alien tax | Subject to alien tax (see B.2.) |
| Guam | Not subject to alien tax | Not subject to alien tax | Not subject to alien tax | Not subject to alien tax | Not subject to alien tax | Not subject to alien tax |
| NMI | Not subject to alien tax | Not subject to alien tax | Not subject to alien tax | Not subject to alien tax | Not subject to alien tax | Not subject to alien tax |
| Puerto Rico | Not subject to alien tax | Not subject to alien tax | Not subject to alien tax | Not subject to alien tax | Subject to alien tax | Subject to alien tax (see B.2.) |
| U.S. Virgin Islands | Not subject to alien tax | Not subject to alien tax | Not subject to alien tax | Not subject to alien tax | Not subject to alien tax | Not subject to alien tax |
| Outside U.S. Not in a Tax Treaty Country | Not subject to alien tax | Not subject to alien tax | Not subject to alien tax | Not subject to alien tax | Subject to alien tax | Subject to alien tax |
C. PROCEDURE
If an assumption cannot be made under B. or it comes to the attention of the developing office that the claimant is a nonresident alien:
| STEP | ACTION |
|---|---|
| 1 | Explain the tax provisions to the claimant. |
| 2 | Get a signed statement if he/she alleges an exception is met. |
| 3 | Get evidence that the exception is met. |
| 4 | Do not annotate the MBR if an exception is met. |
| 5 | Annotate the MBR to show the claimant is subject to tax witholding if the evidence does not establish an exception is met. |
| 6 | Document the file, if appropriate, to show the country of citizenship and the basis for nonresident alien status (e.g., in U.S. on a visitor's visa). |