PROCEDURES FOR WITHHOLDING AGENTS TO ENSURE THAT FOREIGN TEACHERS AND RESEARCHERS ARE ENTITLED TO EXEMPTION FROM TAX AND WAGE WITHHOLDING.

Rev. Proc. 87-9

SECTION 1. PURPOSE

Alien teachers and researchers who receive compensation for teaching and research services performed for a limited time at a United States university or other institution are exempt from United States income tax on such compensation if an applicable tax treaty so provides and if the requirements of the treaty are met. The purpose of this revenue procedure is to inform withholding agents what information they must obtain in order to rely on an alien's claim for exemption from withholding under an income tax treaty to which the United States is a party.

This revenue procedure is intended to describe the circumstances under which a withholding agent may ensure that he will not be liable for failure to withhold and pay over federal tax on compensation paid to an alien teacher or researcher. It is not intended to prescribe conditions under which an alien is eligible for a treaty exemption. An alien's eligibility for a treaty exemption is a factual question to be determined under the circumstances of each case.

SEC. 2. SCOPE

This revenue procedure applies to teacher's and researcher's exemptions claimed under the indicated articles of the tax treaties between the United States and the following countries:

Austria (Article XII)

In general, if an alien teacher or researcher supplies to the payor of compensation for teaching or research services the information prescribed in section 5 of this revenue procedure in the form prescribed in section 4 of this revenue procedure, the payor will not be liable as a withholding agent under either section 1441 or section 3402 of the Internal Revenue Code for failure to withhold and pay over federal income tax on compensation for such services. This rule will not apply if the payor actually knows or reasonably should know that the alien is not eligible for the treaty exemption, as discussed in section 6 of this revenue procedure.

SEC. 4. FORM TO BE SUBMITTED

Sections 1441 and 3402 of the Code require the payor of compensation for personal services to withhold and pay over federal tax on such payments. Section 894 provides that, to the extent required by any treaty obligation of the United States, income of any kind shall not be included in gross income and shall be exempt from taxation.

Aliens receiving compensation claimed to be exempt under a treaty must inform the payor of the grounds for their claim by submitting Form 8233 (in duplicate if the compensation is wages). The Form 8233 must contain sufficient facts to justify the claim for exemption. A separate Form 8233 must be filed for each taxable year.

To meet the requirements of this revenue procedure, the alien must file Form 8233 completed in accordance with the instructions to that form. The Form 8233 must contain the specific representations described in Section 5 of this revenue procedure for the country under whose treaty the alien claims exemption.

SEC. 5. STATEMENTS REQUIRED IN FORM 8233

01 IN GENERAL. The subsections of this section list the statements that must be contained in Form 8233 for exemptions claimed under each treaty article listed in section 2. Where more than one country is listed in the heading of a subsection, the requirements of that subsection are identical for each country listed.

For each treaty, the alien must make representations about the date of his arrival in the United States. In many cases, whether the alien meets the residency and time limitations of the treaty is determined with reference to this date. In this revenue procedure, the date of the alien's arrival in the United States means the date of his last arrival in the United States before beginning the teaching, research, or similar services for which exemption is claimed.

02 AUSTRIA, DENMARK, FEDERAL REPUBLIC OF GERMANY, IRELAND, PAKISTAN, AND SWITZERLAND.

1. I am a resident of ______ [insert the name of the country under whose treaty the alien claims exemption]. I am not a United States citizen. I have not been lawfully accorded the privilege of residing permanently in the United States as an immigrant.

2. I am a professor or teacher visiting the United States for the purpose of teaching at ______ [insert the name of the educational institution at which the alien teaches], which is a recognized educational institution. I will receive compensation for my teaching activities.

3. The teaching compensation received during the entire taxable year (or during the period from _____ to _____) qualifies for exemption from withholding of federal tax under the tax treaty between the United States and ______ [insert the name of the country under whose treaty the alien claims exemption]. I have not previously claimed an income tax exemption under this treaty for income received as a teacher or student before the date of my arrival in the United States.

4. I arrived in the United States on ______ [insert the date of the alien's last arrival into the United States before beginning the teaching services for which exemption is claimed]. The treaty exemption is available only for compensation paid during a period of two years beginning on that date.

03 EGYPT, HUNGARY, KOREA, PHILIPPINES, POLAND, AND ROMANIA.

1. I was resident of ______ [insert the name of the country under whose treaty the alien claims exemption] on the date of my arrival in the United States. I am not a United States citizen. I have not been lawfully accorded the privilege of residing permanently in the United States as an immigrant.

2. I have accepted an invitation by the United States government (or by a political subdivision or local authority thereof), or by a university or other recognized educational institution in the United States, to come to the United States for a period not expected to exceed two years for the purpose of teaching or engaging in research at ______[insert the name of the educational institution], which is a recognized educational institution. I will receive compensation for my teaching or research activities.

3. The teaching or research compensation received during the entire taxable year (or for the portion of the year from _____ to _____) qualifies for exemption from withholding of federal tax under the tax treaty between the United States and ______ [insert the name of the country under whose treaty the alien claims exemption]. I have not previously claimed an income tax exemption under this treaty for income received as a teacher, researcher, or student before the date of my arrival in the United States.

4. Any research I perform will be undertaken in the public interest and not primarily for the private benefit of a specific person or persons.

5. I arrived in the United States on ______[insert the date of the alien's last arrival in the United States before beginning the teaching or research services for which exemption is claimed]. The treaty exemption is available only for compensation received during a period of two years beginning on that date.

04 BELGIUM, FINLAND, JAPAN, AND NETHERLANDS.

1. I was a resident of ______[insert the name of the country under whose treaty the alien claims exemption] on the date of my arrival in the United States. I am not a United States citizen. I have not been lawfully accorded the privilege of residing permanently in the United States as an immigrant.

2. I have accepted an invitation by the United States Government, or by a university or other recognized educational institution in the United States, to come to the United States for the purpose of teaching or engaging in research at ______ [insert the name of the educational institution], which is a recognized educational institution. I will receive compensation for my teaching or research activities.

3. The teaching or research compensation received during the entire taxable year (or during the portion of the year from _____ to _____) qualifies for exemption from withholding of federal tax under the tax treaty between the United States and ______ [insert the name of the country under whose treaty the alien claims exemption]. I have not previously claimed an income tax exemption under this treaty for income received as a teacher, researcher, or student before the date of my arrival in the United States.

4. Any research I perform will be undertaken in the public interest and not primarily for the private benefit of a specific person or persons.

5. I arrived in the United States on ______ [insert the date of the alien's last arrival in the United States before beginning the teaching or research services for which exemption is claimed]. The treaty exemption is available only for compensation received during the period of two years beginning on that date.

05 ICELAND AND NORWAY.

1. I was a resident of ______ [insert the name of the country under whose treaty the alien claims exemption] on the date of my arrival in the United States. I am not a United States citizen. I have not been lawfully accorded the privilege of residing permanently in the United States as an immigrant.

2. I have accepted an invitation by the United States government, or by a university or other recognized educational institution in the United States, to come to the United States for a period not expected to exceed two years for the purpose of teaching or engaging in research at ______ [insert the name of the educational institution], which is a recognized educational institution. I will receive compensation for my teaching or research activities.

3. The teaching or research compensation qualifies for exemption from withholding of federal tax under the tax treaty between the United States and ______ [insert the name of the country under whose treaty the alien claims exemption]. I have not previously claimed an income tax exemption under this treaty for income received as a teacher, researcher or student before the date of my arrival in the United States.

4. Any research I perform will not be undertaken primarily for the private benefit of a specific person or persons.

5. I arrived in the United States on ______ [insert the date of the alien's last arrival in the United States before beginning the teaching or research services for which exemption is claimed]. The treaty exemption is available only for compensation received during a period of two years beginning on that date.

06 JAMAICA.

1. I was a resident of Jamaica on the date of my arrival in the United States. I am not a United States citizen. I have not been lawfully accorded the privilege of residing permanently in the United States as an immigrant.

2. I am visiting the United States for the purpose of teaching or conducting research for a period not expected to exceed two years at ______ [insert the name of the educational institution at which the alien teaches or conducts research], which is a recognized educational institution. I will receive compensation for my teaching or research activities.

3. The teaching or research compensation received during the entire taxable year (or during the period from _____ to _____) qualifies for exemption from withholding of federal tax under the tax treaty between the United States and Jamaica. I have not previously claimed an income tax exemption under that treaty for income received as a teacher, researcher, or student before the date of my arrival in the United States.

4. I arrived in the United States on _____[insert the date of the alien's last arrival in the United States before beginning the teaching or research services for which exemption is claimed]. The treaty exemption is available only for compensation paid during a period of two years beginning on that date.

07 THE PEOPLES REPUBLIC OF CHINA.

1. I was a resident of The Peoples Republic of China on the date of my arrival in the United States. I am not a United States citizen. I have not been lawfully accorded the privilege of residing permanently in the United States as an immigrant.

2. I am visiting the United States for the purpose of teaching, giving lectures, or conducting research at ______ [insert the name of the educational institution or scientific research institution at which the alien teaches, lectures, or conducts research], which is an accredited educational institution or scientific research institution. I will receive compensation for my teaching, lecturing, or research activities.

3. The teaching, lecturing, or research compensation received during the entire taxable year (or during the period from _____ to _____) qualifies for exemption from withholding of federal tax under the tax treaty between the United States and The Peoples Republic of China. I have not previously claimed an income tax exemption under that treaty for income received as a teacher, lecturer, researcher, or student before the date of my arrival in the United States.

4. Any research I perform will be undertaken in the public interest and not primarily for the private benefit of a specific person or persons.

5. I arrived in the United States ______ [insert the date of the alien's last arrival in the United States before beginning his teaching, lecturing, or research activities]. The treaty exemption is available only for compensation received during a maximum aggregate period of three years. No exemption may be claimed for * * *.

08 FRANCE.

1. I was a resident of France on the date of my arrival in the United States. I am not a United States citizen. I have not been lawfully accorded the privilege of residing permanently in the United States as an immigrant.

2. I have accepted an invitation by the United States government or by a university or other accredited educational or research institution in the United States to come to the United States for the purpose of teaching or engaging in research at ______ [insert the name of the educational or research institution], which is an accredited educational or research institution. I will receive compensation for my teaching or research activities.

3.The teaching or research compensation received during the entire taxable year (or during the period from _____ to _____) qualifies for exemption from withholding of federal tax under the tax treaty between the United States and France. I have not previously claimed an income tax exemption under that treaty for income received as a teacher, researcher, or student before the date of my arrival in the United States.

4. Any research I perform will be undertaken in the public interest and not primarily for the private benefit of a specific person or persons.

5. I arrived in the United States on ______ [insert the date of the alien's last arrival in the United States before beginning the teaching or research services for which exemption is claimed]. The treaty exemption is available only for compensation received during a period of two years beginning on that date.

09 GREECE.

1. I am a resident of Greece. I am not a United States citizen. I have not been lawfully accorded the privilege of residing permanently in the United States as an immigrant.

2. I am a professor or teacher visiting the United States for the purpose of teaching at ______ [insert the name of the other educational institution at which the alien teaches], which is an educational institution. I will receive compensation for my teaching activities.

3. The teaching compensation received during the entire taxable year (or during the period from _____ to _____) qualifies for exemption from withholding of federal tax under the tax treaty between the United States and Greece. I have not previously claimed an income tax exemption under that treaty for income received as a teacher or student before the date of my arrival in the United States.

4. I arrived in the United States on ______ [insert the date of the alien's last arrival in the United States before beginning the teaching services for which exemption is claimed]. The treaty exemption is available only for compensation received during a period of three years beginning on that date.

10 ITALY.

1. I was a resident of Italy on the date of my arrival in the United States. I am not a United States citizen. I have not been accorded the privilege of residing permanently in the United States as an immigrant.

2. I am a professor or teacher visiting the United States for the purpose of teaching or performing research at ______ [insert the name of the educational institution or medical facility at which the alien teaches or performs research], which is an educational institution or a medical facility primarily funded from governmental sources. I will receive compensation for my teaching or research activities.

3. The compensation received during the entire taxable year (or during the period from _____ to _____) qualifies for exemption from withholding of federal tax under the tax treaty between the United States and Italy. I have not previously claimed an income tax exemption under that treaty for income received as a teacher, researcher, or student before the date of my arrival in the United States.

4. Any research I perform will be undertaken in the general interest and not primarily for the private benefit of a specific person or persons.

5. I arrived in the United States on ______ [insert the date of the alien's last arrival in the United States before beginning the teaching or research services for which exemption is claimed]. The treaty exemption is available only for compensation received during a period of two years beginning on that date.

11 LUXEMBOURG AND SWEDEN.

1. I am a resident of ______ [insert the name of the country under whose treaty the alien claims exemption]. I am not a United States citizen. I have not been lawfully accorded the privilege of residing permanently in the United States as an immigrant.

2. I have accepted an invitation by ______ [insert the name of the educational institution where the alien teaches or engages in research], which is a recognized educational institution, to come to the United States for the purpose of teaching or engaging in research at that institution. I will receive compensation for my teaching or research activities.

3. The teaching or research compensation received during the entire taxable year (or during the period from _____ to _____) qualifies for exemption from withholding of federal tax under the tax treaty between the United States and ______ [insert the name of the country under whose treaty the alien claims exemption]. I have not previously claimed an income tax exemption under that treaty for income received as a teacher, researcher, or student before the date of my arrival in the United States.

4. Any research I perform will not be carried on for the benefit of any person using or disseminating the results for purposes of profit.

5. I arrived in the United States on ______ [insert the date of the alien's last arrival in the United States before beginning the teaching or research services for which exemption is claimed]. The treaty exemption is available only for compensation received during a period of two years beginning on that date.

12 TRINIDAD AND TOBAGO.

1. I was a resident of Trinidad and Tobago on the date of my arrival in the United States. I am not a United States citizen. I have not been lawfully accorded the privilege of residing permanently in the United States as an immigrant.

2. I have accepted an invitation by the United States government, or by a university or other educational institution in the United States, to come to the United States for the purpose of teaching or engaging in research at ______ [insert the name of the educational institution], which is an educational institution approved by an appropriate governmental education authority. No agreement exists between the government of the United States and the government of Trinidad and Tobago for the provision of my services. I will receive compensation for my teaching or research services.

3. The teaching or research compensation received during the entire taxable year (or for the period from _____ to _____) qualifies for exemption from withholding of federal tax under the tax treaty between the United States and Trinidad and Tobago. I have not previously claimed an income tax exemption under that treaty for income received as a teacher, researcher, or student before the date of my arrival in the United States.

4. Any research I perform will be undertaken in the public interest and not primarily for the private benefit of a specific person or persons.

5. I arrived in the United States on ______ [insert the date of the alien's last arrival in the United States before beginning the teaching or research services for which exemption is claimed]. The treaty exemption is available only for compensation received during a period of two years beginning on that date.

13 UNION OF SOVIET SOCIALIST REPUBLICS.

1. I am a resident of the Union of Soviet Socialist Republics. I am not a United States citizen. I have not been lawfully accorded the privilege of residing permanently in the United States as an immigrant.

2. I have accepted an invitation by a governmental agency or institution in the United States, or by an educational or scientific research institution in the United States, to come to the United States for the purpose of teaching, engaging in research, or participating in scientific, technical, or professional conferences at ______ [insert the name of the governmental agency or institution, educational or scientific institution, or organization sponsoring a professional conference], which is a governmental agency or institution, an educational or scientific institution, or an organization sponsoring a professional conference. I will receive compensation for my teaching, research or conference activities.

3. The teaching, research, or conference compensation received during the entire taxable year (or during the period from _____ to _____) qualifies for exemption from withholding of federal tax under the tax treaty between the United States and the Union of Soviet Socialist Republics. I have not previously claimed an income tax exemption under that treaty for income received as a teacher, researcher, conference participant, or student before the date of my arrival in the United States.

4. Any research I perform will not be undertaken primarily for the benefit of a private person or commercial enterprise of the United States or a foreign trade organization of the Union of Soviet Socialist Republics, unless the research is conducted on the basis of intergovernmental agreements on cooperation.

5. I arrived in the United States on ______ [insert the date of the alien's last arrival in the United States before beginning the teaching, research, or conference services for which exemption is claimed]. The treaty exemption is available only for compensation received during a period of two years beginning on that date.

14 UNITED KINGDOM.

1. I was a resident of the United Kingdom on the date of my arrival in the United States. I am not a United States citizen. I have not been accorded the privilege of residing permanently in the United States as an immigrant.

2. I am a professor or teacher visiting the United States for a period of not more than two years for the purpose of teaching or engaging in research at ______ [insert the name of the educational institution], which is a recognized educational institution. I will receive compensation for my teaching or research activities.

3. The teaching or research compensation received during the entire taxable year (or during the period from _____ to _____) qualifies for exemption from withholding of federal tax under the tax treaty between the United States and the United Kingdom. I have not previously claimed an income tax exemption under that treaty from income received as a teacher, researcher, or student before the date of my arrival in the United States.

4. Any research I perform will be undertaken in the public interest and not primarily for the benefit of any private person or persons.

5. I arrived in the United States on ______ [insert the date of the alien's last arrival in the United States before beginning the teaching or research services for which exemption is claimed]. The treaty exemption is available only for compensation received during a period of two years beginning on that date. The entire treaty exemption is lost retroactively if my stay in the United States exceeds two years.

SEC. 6. EXCEPTION FOR KNOWLEDGE OF CONTRARY FACTS

In general, a withholding agent may rely on a Form 8233 that is completed in accordance with sections 4 and 5 of this revenue procedure. Such reliance is not reasonable, however, and the protection afforded by section 3 of this revenue procedure will not apply, if the agent actually knows that the alien is not eligible for the treaty exemption or actually knows or reasonably should know that a statement by the alien on Form 8233 is false for any part of the period during which the alien claims exemption. For example, if an alien claims an exemption for compensation paid by the withholding agent for a period of time in excess of that provided in section 5 for the applicable treaty, reliance on this revenue procedure would be unreasonable.

If an exemption claimed under the United Kingdom tax treaty is lost retroactively because the alien's stay in the United States exceeds two years, liability for failure to withhold and pay over federal tax will not be retroactively imposed on a withholding agent for any payment made at a time when the agent's reliance on the statement contained in Form 8233 was reasonable. However, reliance on such statement is unreasonable if an alien claiming an exemption under the United Kingdom treaty has a contract with the withholding agent under which it is expected that the alien will remain in the United States for more than two years.

SEC. 7. PRIVATE RULINGS

This revenue procedure is intended to provide clear rules for aliens and withholding agents on how to ensure that the payor of teaching, research, and similar compensation to an alien claiming exemption from tax under a treaty will not be liable for failure to withhold and pay over tax on such compensation. Therefore, the Internal Revenue Service will no longer issue rulings on whether compensation paid to an alien for teaching or research services performed in the United States for an educational or scientific institution is exempt from withholding and from federal income tax under the terms of one of the treaties listed in section 2 of this revenue procedure, if the alien can truthfully make the representations required by this revenue procedure for the treaty under which he claims exemption.