Nonresident Tax Issues

Failure to Obtain Current W8

If a business fails to update their W8 forms on file when they expire at the 3 year mark, but continue to withhold at the same rate and file 1042s, what would the liability (tax, penalties, interest) be for the business if audited? Would the business be liable for the difference between taxes held and the 30% rate plus whatever the fee/interest?

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