Purpose:

The purpose of this bulletin is to notify agencies of a new program that will automatically update the Form 8233 information on the Employee Tax Data page when the form is no longer valid, to ensure employees with expired forms no longer receive the benefits of the treaty.

Affected Employees:

Nonresident alien employees taking advantage of a tax treaty.

Background:

Per IRS publication 519, if a tax treaty between the United States and a nonresident alien employee’s country of residence provides exemption from, or a reduced rate of tax, the nonresident alien employee must notify the withholding agent of their foreign status and intention to claim a tax treaty withholding exemption. To notify the withholding agent, Form 8233 should be accurately and timely completed, and submitted for any personal services which include income earned while teaching, studying, and training, independent personal services, and dependent personal services. Instructions on the IRS website states that an employee must complete a separate Form 8233 for each:

• Tax year (being sure to specify the tax year in the space provided above part I of the form)
• Withholding agent
• Type of income

OSC Actions:

OSC will run a program after the last check of the calendar year has confirmed that will identify all employees with a max row on the Federal Tax Data Page with a Form 8233 Effective Date less than or equal to December 31 of the current calendar year. OSC will take the following actions with this group of employees. 

• Add a new Federal Tax Data row with an effective date equal to the date the program is run,
• Switch the Form 8233 indicator from Yes to No,
• Remove all Form 8233 Dates

These changes are intended to end any treaty benefits for a subsequent calendar year when the current Form 8233 has dates in the prior calendar year. IRS regulations require a new Form 8233 to be timely submitted every calendar year by a nonresident alien who is taking advantage of an available tax treaty. 

Prior to running the program, OSC will release a Control-D report Expiring Form 8233 (NTAX556) that will identify all the employees that will have their Federal Tax Data page updated by this program. This report will display Company, Dept ID, NYS Employee ID number, and the Form 8233 Effective Date. 

Agency Actions:

Before year end, agencies should review the Expiring Form 8233 (NTAX556) report in Control-D and obtain a new Form 8233 for all nonresident alien employees who wish to continue taking advantage of an available tax treaty reducing their withholding tax in the upcoming year. When a new and valid form has been obtained, the agency must update the Federal Tax Data page with the following information:

• Country - Employees country of origin 
• Elig Income Code – The income code the employee intends to use (Independent Personal Services, Dependent Personal Services, Studying/Training, Teaching).
• Treaty ID – TIAS (may or may not have additional numbers after).
• Date of Entry – First day the employee entered the United States.
• Treaty Expiration Date - See attached IRS Tax Treaty Table to determine the treaty expiration date.
• Form 8233 Received – Yes            
• Form 8233 Effective Date – January 1, 2024 (Tax Year specified on Form 8233 for) . If the pay period begin date for the first check of the tax year or any date prior to the first day of the form tax year is used the program will update the tax data page to remove the Form 8233 information. 
• Form 8233 Expiration Date – December 31, 2024 

Questions:

Questions regarding this bulletin may be emailed to the Tax and Compliance mailbox.