Classification of Taxpayers for U.S. Tax Purposes |
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U.S. law treats U.S. persons and foreign persons differently for tax purposes. Therefore, it is important to be able to distinguish between these two types of taxpayers.
United States Persons
The term ''United States person'' means:
Foreign Persons
A foreign person includes:
- Nonresident alien individual
- Foreign corporation
- Foreign partnership
- Foreign trust
- A foreign estate
- Any other person that is not a U.S. person
Generally, the U.S. branch of a foreign corporation or partnership is treated as a foreign person. Refer to IRC 7701(a)(31) for the definition of a foreign estate and a foreign trust.
For Federal tax purposes, certain business entities automatically are classified as corporations. Other business entities may choose how they are classified for Federal tax purposes. Except for a business entity automatically classified as a corporation, a business entity with at least two members can choose to be classified as either an association taxable as a corporation or a partnership, and a business entity with a single member can choose to be classified as either an association taxable as a corporation or disregarded as an entity separate from its owner.
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Page Last Reviewed or Updated: November 03, 2008