Page:United States Statutes at Large Volume 48 Part 1.djvu/749

 73d C ONGRESS. SESS. II. CH. 277 . MAY 10, 1934. 723 SEC. 143. WITHHOLDING OF TAX AT SOURCE. INCOME TAX. RETURNS AND PAYMENTS-Contd. (a) TAX-FREE COVENANT BONDS .- Withholding tax at (1) REQ UIREMENT OF WITHHOLDING .-In any case where bonds, source. ax-tree covenant mortgages, or deeds of trust, or other similar obligations ofa bonds. corporation, issued before January 1, 1934, con tain a c ontract or By co rporation s y , , agreeing to pay inter- prvision bwhic h the obligor agrees to pay any portion of the est, free from tax, etc . tax imposed by this title upon the obligee, or to reimburse the obli gee for any port ion of t he tax, or to pay the int erest wi thout deduction for any tax which the obligor may be required or per- mitt ed to pa y thereo n, or to retain therefrom under a ny law o f the United States, the obligor shall deduct and withhold a tax equal Tax withheld. to 2 per centum of the interest upon such bonds, mortgages, deeds of trust, or other obligations, whether such interest is payable annually or at shorter or longer periods, if payable to an indi- vi dual, a partnership, or a foreign corporation not engaged in trade or business within the United States and not having any office or place of bus iness therein : Pr ovi ded , That if the liability R assumed by the obligor does not exceed 2 per centum of the interest, then the deduction and withholding shall be at the following rates 4 per centum in the case of a nonresident alien individual, or Nonresident alien in- (A) dividual, etc. of any p artne rship not engaged in trade or business within the United States and not having any office or place of business therein and composed in whole or in part of nonresident aliens, (B) 133/ 4 per centum in the case of such a foreign corporation, and (C) 2 per centum in the case of other individuals and partnerships : Pro- From foreign,corpo- rations. vided further, That if the owners of such obligations are not Other individuals, known to the withholding agent the Commissioner may authorize a Unknown owners. such deduction and withholding to be at the rate of 2 per centum, or, if the liability assumed by the obligor does not exceed 2 per centum of the interest, then at the rate of 4 per centum. (2) BE NEF IT OF CREDITS AGAINST NET INCOME .-Such deduction Benefit of credits and withholding shall not be required in the case of a citizen or against net income. resident entitled to receive such interest, if he files with the with- holding agent on or before February 1 a signed notice in writing claiming the benefit of the credits provided in section 25 (b) Ante, p. 60. nor in the case of a nonresident alien individual if so provided Nonresident alien. for in regulations prescribed by the Commissioner under section Po8t, p. 736' 214 . 3) INCOME OF OBLIGOR AND OBLIGEE .-The obligor shall not be Restriction on obli- ( gor and obligee a llowed a de ducti on for the payme nt of the t ax im posed by this title, or any othe r tax paid pursu ant to the tax-f ree co venan t clause, nor shall such tax be included in the gross income of the obligee. (b) NONRESIDENT ALrnNs.-All pe rson s, in wh atev er c apac ity Normai dtenntaliens. a ie acting, including lessees or mortgagors of real or personal property, at source. fiducia ries, em ployers, and all officer s and em ployees of the U nited States, having the control, receipt, custody, disposal, or payment of interest (except interest on deposits with persons carrying on the banking business paid to persons not engaged in business in the United States and not having an office or place of business therein), rent, s alaries, wages, premiums, annuit ies, com pensatio ns, remu nera- tions, emoluments, or other fixed or determinable annual or period- ical gains, profits, and income, of any nonresident alien individual, or of any partnership not engaged in trade or business within the United States and not having any office or place of business therein and composed in whole or in part of nonresident aliens, (other than inco me re ceived as d ivide nds of the class allow ed as a credit by Exception . section 25 (a) ) shall (except in the cases provided for in subsection Ante, p .692.