DEFINITIONS: “Withholding Agent”
26 U.S.C. §7701(a)(16)
TITLE 26 > Subtitle F > CHAPTER 79 > Sec. 7701.
Sec. 7701. – Definitions(a)(16) Withholding agent
The term ”withholding agent” means any person required to deduct and withhold any tax under the provisions of section 1441, 1442, 1443, or 1461. [See Title 26, Subtitle A, Chapter 3, Subchapter A: Nonresident Aliens and Foreign Corporations]
IRS Form 2678
IRS Form 2678 is the only way that a person can be designated as an “employer” agent authorized to withhold taxes. If this form has not been submitted to the IRS, you are not an “employee” and all federal taxes taken from your pay are illegally withheld, even if you begged to have them deducted.
26 U.S. Code § 1473 – Definitions
(1)Withholdable payment
Except as otherwise provided by the Secretary—
(A)In general
The term “withholdable payment” means—
(i) any payment of interest (including any original issue discount), dividends, rents, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, and other fixed or determinable annual or periodical gains, profits, and income, if such payment is from sources within the United States, and
(ii) any gross proceeds from the sale or other disposition of any property of a type which can produce interest or dividends from sources within the United States.
(B)Exception for income connected with United States business
Such term shall not include any item of income which is taken into account under section 871(b)(1) or 882(a)(1) for the taxable year.
(C)Special rule for sourcing interest paid by foreign branches of domestic financial institutions
Subparagraph (B) of section 861(a)(1) shall not apply.
(4)Withholding agent
The term “withholding agent” means all persons, in whatever capacity acting, having the control, receipt, custody, disposal, or payment of any withholdable payment.
26 C.F.R. §1.1441-1(c)(19) Definition of “payor”
26 CFR § 1.1441-1 – Requirement for the deduction and withholding of tax on payments to foreign persons.
§ 1.1441-1 Requirement for the deduction and withholding of tax on payments to foreign persons.
(c) Definitions. The following definitions apply for purposes of sections 1441 through 1443, 1461, and regulations under those sections. For definitions of terms used in these regulations that are defined under sections 1471 through 1474, see subparagraphs (43) through (56) of this paragraph.
(1) Withholding. The term withholding means the deduction and withholding of tax at the applicable rate from the payment.
[. . .]
(19) Payor. The term payor is defined in § 31.3406(a)-2 of this chapter and § 1.6049-4(a)(2) and generally includes a withholding agent, as defined in § 1.1441-7(a). The term also includes any person that makes a payment to an intermediary, flow-through entity, or U.S. branch that is not treated as a U.S. person to the extent the intermediary, flow-through, or U.S. branch provides a Form W-9 or other appropriate information relating to a payee so that the payment can be reported under chapter 61 of the Internal Revenue Code and, if required, subject to backup withholding under section 3406. This latter rule does not preclude the intermediary, flow-through entity, or U.S. branch from also being a payor.
26 C.F.R. §1.1441-7 General provisions relating to withholding agents
Withholding Agent, IRS
You are a withholding agent if you are a U.S. or foreign person that has control, receipt, custody, disposal, or payment of any item of income of a foreign person that is subject to withholding. A withholding agent may be an individual, corporation, partnership, trust, association, or any other entity, including any foreign intermediary, foreign partnership, or U.S. branch of certain foreign banks and insurance companies. You may be a withholding agent even if there is no requirement to withhold from a payment or even if another person has withheld the required amount from the payment.
Although several persons may be withholding agents for a single payment, the full tax is required to be withheld only once. Generally, the U.S. person who pays an amount subject to NRA withholding is the person responsible for withholding. However, other persons may be required to withhold. For example, a payment made by a flow-through entity or nonqualified intermediary that knows, or has reason to know, that the full amount of NRA withholding was not done by the person from which it receives a payment is required to do the appropriate withholding since it also falls within the definition of a withholding agent. In addition, withholding must be done by any qualified intermediary in accordance with the terms of its qualified intermediary withholding agreement.
[Withholding agent, IRS; SOURCE: https://www.irs.gov/individuals/international-taxpayers/withholding-agent; NOTE: American nationals are not “foreign persons” for the purposes of withholding on foreign persons pursuant to 26 U.S.C. 1441. To be a “person”, you must make an “election” to become so by either filing a 1040 (which says “U.S. individual income tax return”) or filing a 1040-NR and seeking privileges pursuant to 26 U.S.C. 873.]
26 U.S.C. §1461(a)
26 U.S. Code § 1461 – Liability for withheld tax
Every person required to deduct and withhold any tax under this chapter is hereby made liable for such tax and is hereby indemnified against the claims and demands of any person for the amount of any payments made in accordance with the provisions of this chapter.
(Aug. 16, 1954, ch. 736, 68A Stat. 360; Pub. L. 89–809, title I, § 103(i), Nov. 13, 1966, 80 Stat. 1554.)