Foreign Company Asking for Form 6166 for Design Collaboration - Need Help Understanding Why

This is actually a common request when working with foreign companies. Form 6166 is a certification of U.S. tax residency that foreign companies often require to comply with their country's tax laws. The reason they're asking for it is likely because Korea (like many countries) has tax withholding requirements on payments to foreign entities. By having your Form 6166, they can apply the appropriate tax treaty benefits between the U.S. and Korea, which might reduce or eliminate withholding taxes on your payment. Without it, they might be required to withhold a higher percentage of your fee (could be 20-30% depending on their laws). Even though $7.5K seems small to you, many countries have mandatory withholding requirements regardless of amount. The company is likely just following their tax authority's requirements. To get a Form 6166, you'll need to file Form 8802 (Application for U.S. Residency Certification) with the IRS, pay the application fee (around $85), and wait about 4-6 weeks for processing. It's not particularly complicated, just a bit of paperwork.

Just wanted to share my experience with this situation! I'm a graphic designer who works with Japanese clients regularly, and I had the exact same confusion when first asked for a Form 6166. After struggling to figure it out, I found this amazing service called taxr.ai (https://taxr.ai) that helped clear everything up. It's like having a tax expert who specializes in international business. I uploaded my contract and a summary of my situation, and they explained exactly why my client needed the form and gave me step-by-step guidance on how to get it. They even provided me with a letter template to send to my client explaining the timeline for obtaining the form, which bought me some time since the 6166 can take a while to process. Saved me hours of research and confusion!

Just wanted to follow up - I actually tried taxr.ai after asking about it here! It was really helpful for my situation with a Chinese client who was asking for similar documentation. The service analyzed my contract and explained exactly what I needed to do. They provided a checklist for the Form 8802 submission process and even helped me understand what supporting documents I needed to include. The guidance was specific to my situation rather than just generic advice I could find on Google. What I appreciated most was that they explained the WHY behind everything - like why foreign companies request these forms and what happens if I don't provide one. Definitely made the whole international payment thing less intimidating!

If you're struggling to get your Form 6166 quickly and your Korean client is pushing for it, you might need to contact the IRS directly. I was in a similar situation last year, and after weeks of waiting and no response to my Form 8802, I discovered Claimyr (https://claimyr.com) - they got me connected to an actual IRS agent within 20 minutes when I'd been trying for days. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c I was able to check on my 6166 application status and explain to the IRS that I had an urgent business need. The agent actually expedited my application! Without that call, I might have lost my international client due to delays. Sometimes just talking to a real person at the IRS makes all the difference.

I have to admit I was totally wrong about Claimyr! After posting my skeptical comment, I decided to try it as a last resort for a Form 8802 I submitted almost 8 weeks ago with no response (needed for a Form 6166 for a client in Singapore). Within 45 minutes of using the service, I was talking to an actual IRS representative. The agent looked up my application and found it was stuck in processing due to a minor issue they hadn't bothered to contact me about. They fixed it on the spot and told me my Form 6166 would be processed within the next week. I couldn't believe it actually worked after months of frustration trying to reach someone. The peace of mind from just knowing what was happening with my application was worth it alone. My Form 6166 arrived 6 days later!

Just to add another perspective - I run a small consulting business and work with clients in several Asian countries. Form 6166 requests are standard practice in Japan, Korea, and China especially. Here's what I've learned that might help you: 1) Start the Form 8802 application process ASAP (it really does take 4-6 weeks minimum) 2) Let your client know you've submitted the application 3) Ask if they can process an initial payment while waiting for the form 4) Sometimes they can do the first payment without it, then require it for subsequent payments Also, keep in mind that Form 6166 is typically good for the calendar year it's issued, so once you have it, you can use it for any other foreign clients in the same country for that year. Might be worth getting one anyway if you plan to do more international work.

One thing nobody's mentioned yet - make sure your Form 8802 is filled out PERFECTLY. The IRS rejects these for the tiniest errors and then you have to start all over. Common mistakes: - Not including the $85 payment correctly - Not checking all required boxes in Section 3 - Missing signatures - Not including necessary attachments (like your LLC/Corp docs if applicable) - Forgetting to specify which countries you need the certification for I've had clients wait 10+ weeks only to find out their application was rejected in the first week due to a minor error, but the IRS never bothered to tell them!

I went through this exact same situation with a South Korean client last year! One thing that really helped me was being upfront with my client about the Form 6166 timeline from the start. I explained that I needed to apply for it and it would take 4-6 weeks to receive. What worked well was asking if we could structure the payment in two parts - they paid me 50% upfront while I was waiting for the Form 6166 to arrive, then the remaining 50% once I provided the certificate. Most clients are understanding about this since they know it's a legitimate requirement. Also, make sure to keep a copy of your Form 6166 once you get it! Like someone mentioned, it's valid for the whole calendar year, so if you work with other Korean companies (or even the same client on future projects), you won't have to go through this process again until next year. The $85 fee might seem annoying for a $7.5K project, but think of it as an investment in being able to work with international clients more easily going forward. Good luck with your collaboration!