Page:United States Statutes at Large Volume 68A.djvu/397

 CH. 3—WITHHOLDING OF TAX

357

CHAPTER 3—WITHHOLDING OF TAX ON NONRESIDENT ALIENS AND FOREIGN CORPORATIONS AND TAX-FREE COVENANT BONDS SUBCHAPTER A. Nonresident aliens and foreign corporations. SUBCHAPTER B. Tax-free covenant bonds. SUBCHAPTER C. Application of withholding provisions.

Subchapter A—Nonresident Aliens and Foreign Corporations Sec. 1441. Withholding of tax on nonresident aliens. Sec. 1442. Withholding of tax on foreign corporations. Sec. 1443. Foreign tax-exempt organizations. SEC. 1441. WITHHOLDING OF TAX ON NONRESIDENT ALIENS. (a) GENERAL RULE. — E x c e p t as otherwise provided in subsection

(c), all persons, in whatever capacity acting (including lessees or mortgagors of real or personal property, fiduciaries, employers, and all officers and employees of the United States) having the control, receipt, custody, disposal, or payment of any of the items of income specified in subsection (b) (to the extent that any of such items constitutes gross income from sources within the United States), of any nonresident alien individual, or of any partnership not engaged in trade or business within the United States and composed in whole or in part of nonresident aliens, shall (except in the cases provided for in section 1451 and except as otherwise provided in regulations prescribed by the Secretary or his delegate under section 874) deduct and withhold from such items a tax equal to 30 percent thereof. (b) INCOME ITEMS.—The items of income referred to in subsection (a) are interest (except interest on deposits with persons carrying on the banking business paid to persons not engaged in business in the United States), dividends, rent, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable annual or periodical gains, profits, and income, and amounts described in section 402(a)(2), section 631(b) and (c), and section 1235, which are considered to be gains from the sale or exchange of capital assets. (c)

EXCEPTIONS.— (1) DIVIDENDS OF FOREIGN CORPORATIONS.—No deduction

or

withholding under subsection (a) shall be required in the case of dividends paid by a foreign corporation unless (A) such corporation is engaged in trade or business within the United States, and (B) more than 85 percent of the gross income of such corporation for the 3-year period ending with the close of its taxable year preceding the declaration of such dividends (or for such part of such period as the corporation has been in existence) was derived from sources within the United States as determined under part I of subchapter N of chapter 1. § 1441(c)(1)

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