Principles of Taxation: Taxpayers & Intermediaries

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WITHOUT PREJUDICE
I am neither herein agreeing with or disagreeing with these principles. I aim to only herein give a neutral analysis.

U.S. TAXPAYERS
Apparently, from the 'United States perspective', a 'taxpayer' by their definition is one who gets fruit off of trees that are "in the United States" and/or is otherwise required to share fruit picked "within the United States". If one looks at the various W-8 (BEN/IMY/EXP/etc.) forms and other forms, one might find oneself encouraged to consider whether or not one has income "within the United States" (i.e. from sources/trees within the United States) or if the income (fruit) is "effectively connected" (with or to a U.S. tree) frequency and so forth.

So even in the case of a foreign company in the United States having a *ahem* branch in the United States, the United States might expect to share the fruit if that foreign company is picking off U.S. trees (U.S. corporations, trusts). However, there could be a treaty or law or something that prevents the United States from participating in your berry-picking. The point is that 'a U.S. taxpayer' by definition may only be someone who is berry-picking on United States trees. So if an entity is a taxpayer or a United States person or United States citizen then perhap said entity is required to let the United States have thirty or so out of every one hundred berries picked. So if an entity in question *is* a taxpayer then it may have to pay tax on income effictively connected with the United States and/or from United States sources.

What/who is or is not a taxpayer is something perhaps to be determined on a case by case basis.

INTERMEDIARIES
Its possible to have an entity "in the United States" (such as a bank branch) that acts as a conduit for gathering fruit and channeling it to an entity in, say, Germany. Such a conduit would be an *intermediary* in that it does not beneficially own the fruit it gathers (i.e. not a 'beneficial owner of income') and only aims to hold the fruit in trust as it makes it to its destination. Now if that intermediary (a bank branch, for example) charged fees or inured profits, such fruit might give arise to taxable income on that intermediary. However, the fruit held in trust by an intermediary would not necessarily taxable. In the case of a foreign bank that had a branch in Washington, D.C. the bank may have to pay tax on the likes of fees. However, for funds destined to the foreign parent company such would not likely be taxed on the U.S. branch in light of a tax treaty or some other law or arrangement.

There are at least two types of intermediaries in the U.S. tax strata: 1) qualified intermediaries, 2) non-qualified intermediaries. From my recollection, one may have to send withholding reports to the IRS the other might not.

(For fun see: W-8 IMY/BEN/EXP/ECI).

There may be errors or mistakes. Study for yourself.