IRS Instructions for Form 1042-S: file it even when a treaty exempts the payment (IRS, Instructions for Form 1042-S, Who Must File; Box 3a exemption codes)
The US buyer reports every royalty payment to a foreign holder on Form 1042-S, even a payment on which a treaty means nothing was withheld. The holder receives a copy.
Dated 18 Oct 2026Source checked 18 Oct 2026Basis: primary text
In the source's own words
“You must file a Form 1042-S even if you did not withhold tax under chapter 3 because the income was exempt from tax under a U.S. tax treaty or the Internal Revenue Code, including the exemption for income that is effectively connected with the conduct of a trade or business in the United States, or you released the tax withheld to the recipient. ... If you use exemption code 04 (exempt or reduced withholding under tax treaty), the country code that you report in box 13b must be a valid treaty country.”
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