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FEDERAL
VOLUME I

REGISTER
9 3 4

AilTEO

NUMBER 76

Washington, Saturday, June 27, 1936
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 Bureau of Internal Revenue.
States and not having an office or place of business therein, divi dends, rent, salaries, wages, premiums, annuities, compensations, T. D. 4649
remunerations, emoluments, or other fixed or determinable annual W ithholding op I ncome T ax U nder S ections 143 and 144 or periodical gains, profits, and income but only to the extent that any of the above items constitutes gross income from sources within of the R evenue A ct of 1936
the United States, of any nonresident alien individual, or of any partnership not engaged in trade or business within the United Collectors of Internal Revenue and Others Concerned:
States and not having any office or place of business therein and Paragraph A. The Revenue Act of 1936 Public, No. 740, composed in whole or in part of nonresident aliens, shall except Seventy-fourth Congress, second session, H. R. 12395, was in the cases provided for in subsection a of this section and except otherwise provided in regulations prescribed by the Commis approved by the President, June 22, 1936, 9 p. m. eastern as sioner under section 215 deduct and withhold from such annual standard time.
or periodical gains, profits, and income a tax equal to 10 per Paragraph B. Section 143 Title I. Income Tax of the centum thereof, except that such rate shall be reduced, in the of a nonresident alien individual a resident of a contiguous Act, relating to withholding of tax at the source, provides: case country, to such rate not less than 5 per centum as may be provided by treaty with such country: Provided, That no such S ec . 143. W ith h oldin g of T ax a t S ource . a Tax-Free Cove deduction or withholding shall be required in the case of dividends nant Bonds.
paid by a foreign corporation unless 1 such corporation is engaged 1 Requirement of withholding.In any case where bonds, in trade or business within the United States or has an office or mortgages, or deeds of trust, or other similar obligations or a place of business therein, and 2 more than 85 per centum of the corporation, issued before January 1, 1934, contain a contract gross income of such corporation for the three-year period ending or provision by which the obligor agrees to pay any portion of with the close of its taxable year preceding the declaration of such the tax imposed by this title upon the ohligee, or to reimburse dividends or for such part of such period as the corporation has the obligee for any portion of the tax, or to pay the interest been in existence was derived from sources within the United without deduction for any tax which the obligor may be re States as determined under the provisions of section 119: Provided quired or permitted to pay thereon, or to retain therefrom under further, That the Commissioner may authorize such tax to be de any law of the United States, the obligor shall deduct and ducted and withheld from the interest upon any securities the withhold a tax equal to 2 per centum of the interest upon owners of which are-not known to the withholding agent. Under such bonds, mortgages, deeds of trust, or other obligations, prescribed by the Commissioner, with the approval of whether such interest is payable annually or at shorter or regulations Secretary, there may be exempted from such deduction and longer periods, if payable to an individual, a partnership, or a the the compensation for personal services of nonresident foreign corporation not engaged in trade or business within the withholding alien individuals who enter and leave the United States at fre United States and not having any office or place of business quent intervals.
therein: Provided, That if the liability assumed by the obligor c Return and payment.Every person required to deduct and does hot exceed 2 per centum of the interest, then the deduction withhold any tax under this section shall make return thereof and withholding shall be at the following rates: A 10 per on or before 15 of each year and shall on or before June centum in the case of a nonresident alien individual except 15, in lieu ofMarch the time prescribed in section 56, pay the tax to that such rate shall be reduced, in case of a resident of a the official of the United Government authorized to receive contiguous country, to such rate, not less than 5 per centum, it. Every such person isStates hereby made liable for such tax and as may be provided by treaty with such country, or of any is hereby indemnified against the claims and demands of any partnership not engaged in trade or business within the United person for the amount of any payments made in accordance with States and not having any office or place of business therein the provisions of this section.
and composed in whole or in part of nonresident aliens, B in d Income of recipient.Income upon which any tax is re the case of such a foreign corporation, 15 per centum, and C 2 per centum in the case of other individuals and partner quired to be withheld at the source under this section shall be ships: Provided further, That if the owners of such obligations included in the return of the recipient of such income, but any are not known to the withholding agent the Commissioner amount of tax so withheld shall be credited against the amount may authorize such deduction and withholding to be at the of income tax as computed in such return.
e Tax paid by recipient.If any tax required under this 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 section to be deducted and withheld is paid by the recipient of the income, it shall not be re-collected from the withholding of 10 per centum.
2 Benefit of credits against n et income.Such deduction agent; nor in cases in which the tax is so paid shall any penalty and withholding shall not be required in the case of a citizen be imposed upon or collected from the recipient of the income or resident entitled to receive such interest, if he files with the or the withholding agent for failure to return or pay the same, withholding agent on or before February 1 a signed notice in unless such failure was fraudulent and for the purpose of evading writing claiming the benefit of the credits provided in section payment.
f Refunds and credits.Where there has been an overpayment 25 b ; nor in the case of a nonresident alien individual if so provided for in regulations prescribed by the Commissioner of tax under this section any refund or credit made under the provisions of section 322 shall be made to the withholding agent under section 215.
3 Income of obligor and obligee.The obligor shall not be unless the amount of such tax was actually withheld by the with holding agent.
allowed a deduction for the payment of the tax imposed by g Withholding before enactm ent of act.Notwithstanding the this title, or any other tax paid pursuant to the tax-free covenant clause, nor shall such tax be included in the gross provisions of subsections a and b , the deduction and w ith holding for any period prior to the tenth day after the date of income of the obligee.
the enactment of this Act shall be upon the items of income and b Nonresident aliens.All persons, in whatever capacity acting,at the rates prescribed in section 143 a and b of the Revenue including lessees or mortgagors of real or personal property, fiduci Act of 1934, as amended, in lieu of the items and rates prescribed aries, employers, and all officers and employees of th e United States, in such subsections.

TREASURY DEPARTMENT.

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