Navigating IRS Requirements for Foreign Partnership and Trust Agreements

Navigating IRS Requirements for Foreign Partnership and Trust Agreements

Navigating IRS agreements for foreign partnerships and trusts is crucial, especially with recent extensions simplifying compliance processes. A withholding foreign partnership (WP) “is any foreign partnership that has entered into a WP withholding agreement with the IRS and is acting in that capacity.” A withholding foreign trust (WT) is a “foreign simple or grantor trust that has entered into a specific agreement with the IRS and functions accordingly.”

These agreements allow WPs and WTs to handle payments subject to nonresident alien (NRA) withholding on behalf of their direct partners, beneficiaries or owners. Essentially, when these entities act in this capacity, they take on the responsibility for NRA withholding on these payments.

WP Agreement Renewals and Certification

To keep a WP agreement in good standing with the IRS, a WP is required to complete a periodic certification every three years.

The current certification cycle spans the years 2021, 2022 and 2023. Entities involved in these agreements should be aware of the deadlines for submitting certifications or applying for waivers. The IRS has set the deadline for review years 2021 or 2022 to Sept. 1, 2024, and for review year 2023 to March 1, 2025. Importantly, these extensions are automatic, simplifying administrative processes for stakeholders.

The IRS has extended WP agreement renewals by clarifying question Q20 on its FAQs webpage, specifically in the section titled "New Applications/2017 Renewals Qualified Intermediary General FAQs.”  The revised question indicates that existing WP and WT agreements will continue to be valid until Dec. 31, 2024. Consequently, there is no need for WPs and WTs to take any additional steps to ensure their agreements remain in effect until Dec. 31, 2024.

The IRS previously indicated through multiple alerts that they would treat existing WP and WT agreements valid until Dec. 31, 2023. The extension of the current WP and WT agreement comes as a welcome relief since the IRS has not yet issued the new agreement.

Next Steps

Ensuring compliance with IRS regulations for foreign partnership and trust agreements is critical for entities engaged in international financial activities. By staying informed and adhering to certification requirements, stakeholders can navigate these obligations with confidence and avoid potential penalties for non-compliance.

For guidance or more information, connect with one of our CBIZ tax professionals today.


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Navigating IRS agreements for foreign partnerships and trusts is crucial, especially with recent extensions simplifying compliance processes.

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