Canadian Partner

[equinecpa]

I'm preparing a 1065 where there is a Canadian Partner - I have a couple of questions:

1. Partners Identifying number? Should I put there Cdn # here, do they need to get an ITIN or ?

2. Any other special consequences of having a Cdn partner?

Thanks

Carolyn

[Bees Knees]

Pub 541 says:

Withholding on foreign partner or firm. If
partnership acquires a U.S. real property inter-
est from a foreign person or firm, the partnership
may have to withhold tax on the amount it pays
for the property (including cash, the fair market
value of other property, and any assumed liability).
If a partnership has income effectively con-
nected with a trade or business in the United
States, it must withhold on the income allocable
to its foreign partners. A partnership may have to
withhold tax on a foreign partner’s distributive share
of fixed or determinable income not effec-
tively connected with a U.S. trade or business. A
partnership that fails to withhold may be held
liable for the tax, applicable penalties, and inter-
est.

If the partnership must withhold tax on the distributive share of income of a foreign partner, then that foreign partner is going to need to get a U.S. tax identification number in order to file a tax return and claim a refund of those taxes withheld.

The U.S. cannot do anything to a non-resident alien living in a foreign country who never sets foot on U.S. soil, other than require the paying entity to withhold tax, thus making that non-resident alien file a U.S. tax return.