Confused about withholding taxes in a multi-member LLC with a foreign partner - double taxation?

The confusion is understandable as there are two different withholding regimes that might apply to your foreign partners. Let me break it down: Form 8813 withholding (Section 1446) applies to a foreign partner's share of the LLC's effectively connected income (ECI), which is income connected to a US trade or business. This is typically filed quarterly with Form 8804/8805 annually. The 30% withholding under IRC sec. 1472 (part of FATCA) applies to what's called "withholdable payments" made to foreign entities that don't provide proper documentation. This is separate from the ECI withholding. The key is understanding what type of distributions you're making. If they're simply distributions of previously taxed income (where you've already withheld via Form 8813), you generally wouldn't withhold again. However, if they're distributions of other types of US-source income (like dividends or interest not effectively connected to a US trade), the 30% might apply. Your foreign partners should provide you with proper documentation (typically Form W-8BEN or W-8BEN-E) to potentially reduce the withholding rate if a tax treaty applies.

After dealing with similar foreign partner headaches in my LLC, I found this amazing tool called taxr.ai (https://taxr.ai) that helped me sort through all the withholding requirements. I was totally confused about the different withholding regimes, especially with partners from different countries having different tax treaty benefits. The tool analyzed our operating agreement, partnership structure, and source of income to clarify exactly which withholding requirements applied to us and which didn't. Saved me from accidentally double-withholding on distributions where we'd already handled the tax obligation through quarterly payments. They also helped explain when FATCA applied vs regular withholding requirements, and generated customized instructions for each partner's situation. Way easier than trying to decipher the IRS publications on my own!

Just wanted to follow up - I tried taxr.ai after seeing the recommendation here. It was actually really helpful for our situation with partners from multiple countries. We had been accidentally double-withholding in some cases and under-withholding in others. The tool helped us understand that for our UK partner, we could reduce withholding from 30% to 15% based on the tax treaty, but we needed specific documentation to qualify. It also clarified that our quarterly withholding covered most of our obligations, but we had some interest payments that needed separate treatment. The step-by-step instructions for each form saved me hours of research. Definitely worth checking out if you're dealing with international partner tax complications.

If you're struggling to get answers directly from the IRS about these foreign partner withholding questions, I highly recommend Claimyr (https://claimyr.com). I wasted weeks trying to get through to someone at the IRS who actually understood international partnership taxation. After using Claimyr's service to connect with the IRS (you can see how it works at https://youtu.be/_kiP6q8DX5c), I was able to speak with a specialist who explained exactly how the withholding regimes worked in our situation and confirmed we didn't need to double-withhold on distributions where we'd already handled the tax through Form 8813. They got me through to the IRS International Tax Department in about 45 minutes instead of the days I was spending trying on my own. The agent even sent me specific references to the relevant regulations that I could show our tax preparer.

I was extremely skeptical about Claimyr when I first saw it mentioned here, but I was desperate after trying for weeks to get answers about our foreign partner withholding requirements. I reluctantly gave it a try, and I have to admit I was wrong. The service actually worked exactly as described. I set it up, went about my day, and about an hour later got a call connecting me to an actual IRS international tax specialist. The agent walked me through the exact withholding requirements for our situation and clarified that we did NOT need to withhold 30% on distributions of income where we had already withheld using Form 8813. They also helped me understand which forms our foreign partners needed to submit to claim treaty benefits. Saved me from potentially over-withholding by thousands of dollars. I hate admitting when I'm wrong, but in this case, I'm glad I gave it a shot.

I've been dealing with this exact situation for our LLC with partners in Germany, France, and Japan. Here's what we learned: The Form 8813 quarterly withholding is on the INCOME allocated to foreign partners, regardless of whether you distribute it. This is under Section 1446. The 30% withholding under FATCA (IRC sec. 1472) applies to certain types of payments to foreign entities, but there are exceptions. If your foreign partner has provided proper documentation (W-8BEN-E) and you're just distributing previously taxed profits, you typically don't need to withhold again. Where it gets complicated is if you're making distributions in excess of basis or if some of your income is from passive sources. We found that getting a letter ruling from the IRS was ultimately the only way to get absolute clarity for our specific situation.

Has anyone dealt with FIRPTA withholding for LLCs with foreign partners that own US real estate? We have the regular income withholding figured out, but now we're selling a property and I'm not sure how that interacts with all this.

I've been through this exact confusion with our LLC that has partners in the UK and Australia. The key insight that finally clicked for me is that these are different taxes on different things at different times. Section 1446 withholding (Form 8813) is on the foreign partner's SHARE of partnership income - you withhold this regardless of whether you actually distribute anything. Think of it as withholding on their "allocated" income. Section 1472 (FATCA) withholding is on actual PAYMENTS to foreign entities that haven't provided proper documentation. But here's the crucial part - if you're distributing profits that have already been subject to Section 1446 withholding, and your foreign partner has provided proper W-8 forms, you typically don't need to withhold again under FATCA. The double taxation concern you mentioned is valid - the IRS doesn't want to tax the same income twice. The confusion often comes from not distinguishing between "income allocation" (what triggers 1446) versus "actual distributions" (what might trigger 1472). For your Canadian and UK partners, make sure they provide W-8BEN or W-8BEN-E forms claiming treaty benefits. This documentation helps establish that distributions of previously taxed partnership income shouldn't be subject to additional withholding. I'd recommend documenting which distributions relate to income that's already been subject to 1446 withholding - this creates a clear paper trail showing you're not double-taxing.