Is outsourcing web development subject to backup withholding?

December 23, 2009 by outsourcing · 1 Comment
Filed under: Other - Taxes 
outsourcing
rohan asked:


I have an internet business. My web development happens in India. Is outsourcing web development on a monthly basis to India ( a few employees there) subject to backup withholding ? This is an expense for the USA business and am wondering is there is any kind of taxes due on this outsourcing bill
Please indicate source/referring page and also if it is exempt in CA. My CPS says I am subject to backup withholding on my outsourcing payments but I see no reference of it on the web. Please provide reference, if possible

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