Page:United States Statutes at Large Volume 96 Part 2.djvu/1135

 PUBLIC LAW 97-455—JAN. 12, 1983

96 STAT. 2497

Public Law 97-455 97th Congress An Act To amend the Internal Revenue Code of 1954 to reduce the rate of certain taxes paid to the Virgin Islands on Virgin Islands source income, to amend the Social Security Act to provide for a temporary period that payment of disability benefits may continue through the heeu-ing stage of the appeals process, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. INCOME TAX RATE ON VIRGIN ISLANDS SOURCE INCOME.

(a) IN GENERAL.—Subpart D of part i n of subchapter N of chapter 1 of the Internal Revenue Code of 1954 (relating to possessions) is amended by inserting after section 934 the following new section:

Jan.12, 1983 [H.R. 7093]

Internal Revenue Code of 1954 and Socifd Security Act, amendments.

"SEC. 934A. INCOME TAX RATE ON VIRGIN ISLANDS SOURCE INCOME. "(a) GENERAL RULE.—For purposes of determining the tax liability

26 USC 934A.

"(b) SUBSECTION (a) RATES NOT TO APPLY TO PRE-EPFECTIVE DATE EARNINGS.—

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incurred by citizens and resident alien individusds of the United States, and corporations organized in the United States, to the Virgin Islands pursuant to this title with respect to amounts received from sources within the Virgin Islands— "(1) the taxes imposed by sections 871(a)(1) and 881 (as made applicable to the Virgin Islands) shall apply except that '10 percent' shall be substituted for '30 percent', and "(2) subsection (a) of section 934 shall not apply to such taxes.

"(1) IN GENERAL.—Any change under subsection (a)(1), and any reduction under section 934 pursuant to subsection (a)(2), in a rate of tax imposed by section 871(a)(l) or 881 shall not apply to dividends paid out of earnings and profits accumulated for taxable years beginning before the effective date of the change or reduction. "(2) ORDERING RULE.—For purposes of paragraph (1), dividends shall be treated as first being paid out of earnings and profits accumulated for taxable years beginning before the effective date of the change or reduction (to the extent thereof)." (b) WITHHOLDING.—Subchapter A of chapter 3 of such Code (relating to withholding of tax on nonresident aliens and foreign corporations) is amended by adding at the end thereof the following new section: SEC. 1444. WITHHOLDING ON VIRGIN ISLANDS SOURCE INCOME.

"For purposes of determining the withholding tax liability incurred in the Virgin Islands pursuant to this title (as made applicable to the Virgin Islands) with respect to amounts received from sources within the Virgin Islands by citizens and resident alien individuals of the United States, and corporations organized in the United States, the rate of withholding tax under sections 1441 and 1442 on income subject to tax under section 871(a)(l) or 881 (as

26 USC 1444.

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