Washington (Aug. 6, 2004) -- The Internal Revenue Service has issued new proposed regulations to determine the source of compensation for labor or personal services.  The new rules apply to individuals who, as employees, perform labor or personal services partly within and partly outside the United States.  Corresponding regulations that had been proposed in 2000 have been withdrawn.

 “These new regulations provide clear and straightforward rules for determining the source of employee compensation income in the cross-border context. At the same time, they provide much needed flexibility that will allow taxpayers and the IRS to take into account specific circumstances in order to reach the right result,” said Greg Jenner, acting assistant secretary for tax policy.  “This approach will reduce disputes between taxpayers and the IRS and allow more efficient use of IRS resources.”

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