Collapse to view only § 1444. Withholding on Virgin Islands source income
- § 1441. Withholding of tax on nonresident aliens
- § 1442. Withholding of tax on foreign corporations
- § 1443. Foreign tax-exempt organizations
- § 1444. Withholding on Virgin Islands source income
- § 1445. Withholding of tax on dispositions of United States real property interests
- § 1446. Withholding of tax on foreign partners’ share of effectively connected income
§ 1441. Withholding of tax on nonresident aliens
(a) General rule
(b) Income itemsThe items of income referred to in subsection (a) are interest (other than original issue discount as defined in section 1273), dividends, rent, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable annual or periodical gains, profits, and income, gains described in section 631(b) or (c), amounts subject to tax under section 871(a)(1)(C), and gains subject to tax under section 871(a)(1)(D). The items of income referred to in subsection (a) from which tax shall be deducted and withheld at the rate of 14 percent are amounts which are received by a nonresident alien individual who is temporarily present in the United States as a nonimmigrant under subparagraph (F), (J), (M), or (Q) of section 101(a)(15) of the Immigration and Nationality Act and which are—
(1) incident to a qualified scholarship to which section 117(a) applies, but only to the extent includible in gross income; or
(2) in the case of an individual who is not a candidate for a degree at an educational organization described in section 170(b)(1)(A)(ii), granted by—
(A) an organization described in section 501(c)(3) which is exempt from tax under section 501(a),
(B) a foreign government,
(C) an international organization, or a binational or multinational educational and cultural foundation or commission created or continued pursuant to the Mutual Educational and Cultural Exchange Act of 1961, or
(D) the United States, or an instrumentality or agency thereof, or a State, or a possession of the United States, or any political subdivision thereof, or the District of Columbia,
as a scholarship or fellowship for study, training, or research in the United States. In the case of a nonresident alien individual who is a member of a domestic partnership, the items of income referred to in subsection (a) shall be treated as referring to items specified in this subsection included in his distributive share of the income of such partnership.
(c) Exceptions
(1) Income connected with United States business
(2) Owner unknown
(3) Bonds with extended maturity dates
(4) Compensation of certain aliens
(5) Special items
(6) Per diem of certain aliens
(7) Certain annuities received under qualified plans
(8) Original issue discount
(9) Interest income from certain portfolio debt investments
(10) Exception for certain interest and dividends
(11) Certain gambling winnings
(12) Certain dividends received from regulated investment companies
(A) In general
(B) Special rule
(d) Exemption of certain foreign partnerships
(e) Alien resident of Puerto Rico
(f) Continental shelf areas
(g) Cross reference
(Aug. 16, 1954, ch. 736, 68A Stat. 357; Aug. 26, 1954, ch. 937, title V, § 544(f), as added July 18, 1956, ch. 627, § 11(a), 70 Stat. 563; amended Pub. L. 85–141, § 11(b)(1), Aug. 14, 1957, 71 Stat. 365; Pub. L. 85–866, title I, § 40(b), Sept. 2, 1958, 72 Stat. 1638; Pub. L. 87–256, § 110(d), Sept. 21, 1961, 75 Stat. 536; Pub. L. 88–272, title III, § 302(c), Feb. 26, 1964, 78 Stat. 146; Pub. L. 89–809, title I, § 103(h), Nov. 13, 1966, 80 Stat. 1553; Pub. L. 91–172, title V, § 505(b), Dec. 30, 1969, 83 Stat. 634; Pub. L. 92–178, title III, § 313(a), (d), Dec. 10, 1971, 85 Stat. 526, 527; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 98–21, title I, § 121(c)(2), Apr. 20, 1983, 97 Stat. 82; Pub. L. 98–369, div. A, title I, §§ 42(a)(13), 127(e)(1), title IV, § 474(r)(29)(G), (H), July 18, 1984, 98 Stat. 557, 652, 845; Pub. L. 99–514, title I, § 123(b)(2), title XII, § 1214(c)(3), title XVIII, § 1810(d)(3)(D), Oct. 22, 1986, 100 Stat. 2113, 2542, 2825; Pub. L. 100–647, title I, § 1001(d)(2)(A), title VI, § 6134(a)(2), Nov. 10, 1988, 102 Stat. 3350, 3721; Pub. L. 101–508, title XI, § 11704(a)(14), Nov. 5, 1990, 104 Stat. 1388–518; Pub. L. 102–318, title V, § 521(b)(32), (33), July 3, 1992, 106 Stat. 312; Pub. L. 103–66, title XIII, § 13237(c)(4), Aug. 10, 1993, 107 Stat. 508; Pub. L. 103–296, title III, § 320(a)(1)(B), Aug. 15, 1994, 108 Stat. 1535; Pub. L. 105–34, title XVI, § 1604(g)(3), Aug. 5, 1997, 111 Stat. 1099; Pub. L. 108–357, title IV, § 411(a)(3)(A), Oct. 22, 2004, 118 Stat. 1503; Pub. L. 113–295, div. A, title II, § 221(a)(92), Dec. 19, 2014, 128 Stat. 4050.)
§ 1442. Withholding of tax on foreign corporations
(a) General rule
(b) Exemption
(c) Exception for certain possessions corporations
(1) Guam, American Samoa, the Northern Mariana Islands, and the Virgin Islands
(2) Commonwealth of Puerto Rico
(A) In general
If dividends are received during a taxable year by a corporation—
(i) created or organized in, or under the law of, the Commonwealth of Puerto Rico, and
(ii) with respect to which the requirements of subparagraphs (A), (B), and (C) of section 881(b)(1) are met for the taxable year,
subsection (a) shall be applied for such taxable year by substituting “10 percent” for “30 percent”.
(B) Applicability
(Aug. 16, 1954, ch. 736, 68A Stat. 358; Pub. L. 89–809, title I, § 104(c), Nov. 13, 1966, 80 Stat. 1557; Pub. L. 92–178, title III, § 313(e), Dec. 10, 1971, 85 Stat. 528; Pub. L. 92–606, § 1(e)(2), Oct. 31, 1972, 86 Stat. 1497; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 98–369, div. A, title I, §§ 127(e)(2), 130(b), title IV, § 474(r)(29)(I), July 18, 1984, 98 Stat. 652, 661, 845; Pub. L. 99–514, title XII, § 1273(b)(2)(B), title XVIII, § 1810(d)(3)(E), Oct. 22, 1986, 100 Stat. 2596, 2825; Pub. L. 100–647, title I, § 1012(g)(7), Nov. 10, 1988, 102 Stat. 3501; Pub. L. 103–66, title XIII, § 13237(c)(5), Aug. 10, 1993, 107 Stat. 508; Pub. L. 108–357, title IV, §§ 411(a)(3)(B), 420(b), Oct. 22, 2004, 118 Stat. 1504, 1513.)
§ 1443. Foreign tax-exempt organizations
(a) Income subject to section 511
(b) Income subject to section 4948
(Aug. 16, 1954, ch. 736, 68A Stat. 358; Pub. L. 91–172, title I, §§ 101(j)(22), 121(d)(2)(C), Dec. 30, 1969, 83 Stat. 528, 547; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.)
§ 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)(1) or 881 shall not exceed the rate of tax on such income under section 871(a)(1) or 881, as the case may be.
(Added Pub. L. 97–455, § 1(b), Jan. 12, 1983, 96 Stat. 2497; amended Pub. L. 100–647, title I, § 1012(x), Nov. 10, 1988, 102 Stat. 3530.)
§ 1445. Withholding of tax on dispositions of United States real property interests
(a) General rule
(b) Exemptions
(1) In general
(2) Transferor furnishes nonforeign affidavit
(3) Nonpublicly traded domestic corporation furnishes affidavit that interests in corporation not United States real property interestsExcept as provided in paragraph (7), this paragraph applies in the case of a disposition of any interest in any domestic corporation if the domestic corporation furnishes to the transferee an affidavit by the domestic corporation stating, under penalty of perjury, that—
(A) the domestic corporation is not and has not been a United States real property holding corporation (as defined in section 897(c)(2)) during the applicable period specified in section 897(c)(1)(A)(ii), or
(B) as of the date of the disposition, interests in such corporation are not United States real property interests by reason of section 897(c)(1)(B).
(4) Transferee receives qualifying statement
(A) In general
(B) Qualifying statementFor purposes of subparagraph (A), the term “qualifying statement” means a statement by the Secretary that—
(i) the transferor either—(I) has reached agreement with the Secretary (or such agreement has been reached by the transferee) for the payment of any tax imposed by section 871(b)(1) or 882(a)(1) on any gain recognized by the transferor on the disposition of the United States real property interest, or(II) is exempt from any tax imposed by section 871(b)(1) or 882(a)(1) on any gain recognized by the transferor on the disposition of the United States real property interest, and
(ii) the transferor or transferee has satisfied any transferor’s unsatisfied withholding liability or has provided adequate security to cover such liability.
(5) Residence where amount realized does not exceed $300,000This paragraph applies to the disposition if—
(A) the property is acquired by the transferee for use by him as a residence, and
(B) the amount realized for the property does not exceed $300,000.
(6) Stock regularly traded on established securities market
(7) Special rules for paragraphs (2), (3), and (9)Paragraph (2), (3), or (9) (as the case may be) shall not apply to any disposition—
(A) if—
(i) the transferee or qualified substitute has actual knowledge that the affidavit referred to in such paragraph, or the statement referred to in paragraph (9)(A)(ii), is false, or
(ii) the transferee or qualified substitute receives a notice (as described in subsection (d)) from a transferor’s agent, transferee’s agent, or qualified substitute that such affidavit or statement is false, or
(B) if the Secretary by regulations requires the transferee or qualified substitute to furnish a copy of such affidavit or statement to the Secretary and the transferee or qualified substitute fails to furnish a copy of such affidavit or statement to the Secretary at such time and in such manner as required by such regulations.
(8) Applicable wash sales transactions
(9) Alternative procedure for furnishing nonforeign affidavitFor purposes of paragraphs (2) and (7)—
(A) In generalParagraph (2) shall be treated as applying to a transaction if, in connection with a disposition of a United States real property interest—
(i) the affidavit specified in paragraph (2) is furnished to a qualified substitute, and
(ii) the qualified substitute furnishes a statement to the transferee stating, under penalty of perjury, that the qualified substitute has such affidavit in his possession.
(B) Regulations
(c) Limitations on amount required to be withheld
(1) Cannot exceed transferor’s maximum tax liability
(A) In general
(B) Request
(C) Refund of excess amounts withheld
(2) Authority of Secretary to prescribe reduced amount
(3) Procedural rules
(A) RegulationsRequests for—
(i) qualifying statements under subsection (b)(4),
(ii) determinations of transferor’s maximum tax liability under paragraph (1), and
(iii) reductions under paragraph (2) in the amount required to be withheld,
shall be made at the time and manner, and shall include such information, as the Secretary shall prescribe by regulations.
(B) Requests to be handled within 90 days
(4) Reduced rate of withholding for residence where amount realized does not exceed $1,000,000In the case of a disposition—
(A) of property which is acquired by the transferee for use by the transferee as a residence,
(B) with respect to which the amount realized for such property does not exceed $1,000,000, and
(C) to which subsection (b)(5) does not apply,
subsection (a) shall be applied by substituting “10 percent” for “15 percent”.
(d) Liability of transferor’s agents, transferee’s agents, or qualified substitutes
(1) Notice of false affidavit; foreign corporationsIf—
(A) the transferor furnishes the transferee or qualified substitute an affidavit described in paragraph (2) of subsection (b) or a domestic corporation furnishes the transferee an affidavit described in paragraph (3) of subsection (b), and
(B) in the case of—
(i) any transferor’s agent—(I) such agent has actual knowledge that such affidavit is false, or(II) in the case of an affidavit described in subsection (b)(2) furnished by a corporation, such corporation is a foreign corporation, or
(ii) any transferee’s agent or qualified substitute, such agent or substitute has actual knowledge that such affidavit is false,
such agent or qualified substitute shall so notify the transferee at such time and in such manner as the Secretary shall require by regulations.
(2) Failure to furnish notice
(A) In general
(B) Liability limited to amount of compensation
(3) Transferor’s agentFor purposes of this subsection, the term “transferor’s agent” means any person who represents the transferor—
(A) in any negotiation with the transferee or any transferee’s agent related to the transaction, or
(B) in settling the transaction.
(4) Transferee’s agentFor purposes of this subsection, the term “transferee’s agent” means any person who represents the transferee—
(A) in any negotiation with the transferor or any transferor’s agent related to the transaction, or
(B) in settling the transaction.
(5) Settlement officer not treated as transferor’s agentFor purposes of this subsection, a person shall not be treated as a transferor’s agent or transferee’s agent with respect to any transaction merely because such person performs 1 or more of the following acts:
(A) The receipt and the disbursement of any portion of the consideration for the transaction.
(B) The recording of any document in connection with the transaction.
(e) Special rules relating to distributions, etc., by corporations, partnerships, trusts, or estates
(1) Certain domestic partnerships, trusts, and estatesIn the case of any disposition of a United States real property interest as defined in section 897(c) (other than a disposition described in paragraph (4) or (5)) by a domestic partnership, domestic trust, or domestic estate, such partnership, the trustee of such trust, or the executor of such estate (as the case may be) shall be required to deduct and withhold under subsection (a) a tax equal to the highest rate of tax in effect for the taxable year under section 11(b) (or, to the extent provided in regulations, 20 percent) multiplied by the gain realized to the extent such gain—
(A) is allocable to a foreign person who is a partner or beneficiary of such partnership, trust, or estate, or
(B) is allocable to a portion of the trust treated as owned by a foreign person under subpart E of part I of subchapter J.
(2) Certain distributions by foreign corporations
(3) Distributions by certain domestic corporations to foreign shareholders
(4) Taxable distributions by domestic or foreign partnerships, trusts, or estates
(5) Rules relating to dispositions of interest in partnerships, trusts, or estates
(6) Distributions by regulated investment companies and real estate investment trusts
(7) Regulations
(f) DefinitionsFor purposes of this section—
(1) Transferor
(2) Transferee
(3) Foreign personThe term “foreign person” means any person other than—
(A) a United States person, and
(B) except as otherwise provided by the Secretary, an entity with respect to which section 897 does not apply by reason of subsection (l) thereof.
(4) Transferor’s maximum tax liabilityThe term “transferor’s maximum tax liability” means, with respect to the disposition of any interest, the sum of—
(A) the maximum amount which the Secretary determines could be imposed as tax under section 871(b)(1) or 882(a)(1) by reason of the disposition, plus
(B) the amount the Secretary determines to be the transferor’s unsatisfied withholding liability with respect to such interest.
(5) Transferor’s unsatisfied withholding liability
(6) Qualified substituteThe term “qualified substitute” means, with respect to a disposition of a United States real property interest—
(A) the person (including any attorney or title company) responsible for closing the transaction, other than the transferor’s agent, and
(B) the transferee’s agent.
(Added Pub. L. 98–369, div. A, title I, § 129(a)(1), July 18, 1984, 98 Stat. 655; amended Pub. L. 99–514, title III, § 311(b)(4), title XVIII, § 1810(f)(2)–(4)(A), (5), (6), (8), Oct. 22, 1986, 100 Stat. 2219, 2827, 2828; Pub. L. 100–647, title I, § 1003(b)(3), Nov. 10, 1988, 102 Stat. 3384; Pub. L. 103–66, title XIII, § 13221(c)(3), Aug. 10, 1993, 107 Stat. 477; Pub. L. 104–188, title I, § 1704(c)(1), Aug. 20, 1996, 110 Stat. 1878; Pub. L. 105–34, title III, § 311(c)(1), Aug. 5, 1997, 111 Stat. 835; Pub. L. 108–27, title III, § 301(a)(2)(C), May 28, 2003, 117 Stat. 758; Pub. L. 109–222, title V, §§ 505(b), 506(b), May 17, 2006, 120 Stat. 356, 358; Pub. L. 110–289, div. C, title I, § 3024(a)–(c), July 30, 2008, 122 Stat. 2895; Pub. L. 112–240, title I, § 102(c)(1)(C), (3), Jan. 2, 2013, 126 Stat. 2319; Pub. L. 114–113, div. Q, title III, §§ 323(b), 324(a), (b), Dec. 18, 2015, 129 Stat. 3103; Pub. L. 115–97, title I, § 13001(b)(3)(A)–(C), Dec. 22, 2017, 131 Stat. 2097.)
§ 1446. Withholding of tax on foreign partners’ share of effectively connected income
(a) General ruleIf—
(1) a partnership has effectively connected taxable income for any taxable year, and
(2) any portion of such income is allocable under section 704 to a foreign partner,
such partnership shall pay a withholding tax under this section at such time and in such manner as the Secretary shall by regulations prescribe.
(b) Amount of withholding tax
(1) In general
(2) Applicable percentageFor purposes of paragraph (1), the term “applicable percentage” means—
(A) the highest rate of tax specified in section 1 in the case of the portion of the effectively connected taxable income which is allocable under section 704 to foreign partners who are not corporations, and
(B) the highest rate of tax specified in section 11(b) in the case of the portion of the effectively connected taxable income which is allocable under section 704 to foreign partners which are corporations.
(c) Effectively connected taxable incomeFor purposes of this section, the term “effectively connected taxable income” means the taxable income of the partnership which is effectively connected (or treated as effectively connected) with the conduct of a trade or business in the United States computed with the following adjustments:
(1) Paragraph (1) of section 703(a) shall not apply.
(2) The partnership shall be allowed a deduction for depletion with respect to oil and gas wells but the amount of such deduction shall be determined without regard to sections 613 and 613A.
(3) There shall not be taken into account any item of income, gain, loss, or deduction to the extent allocable under section 704 to any partner who is not a foreign partner.
(d) Treatment of foreign partners
(1) Allowance of credit
(2) Credit treated as distributed to partnerExcept as provided in regulations, a foreign partner’s share of any withholding tax paid by the partnership under this section shall be treated as distributed to such partner by such partnership on the earlier of—
(A) the day on which such tax was paid by the partnership, or
(B) the last day of the partnership’s taxable year for which such tax was paid.
(e) Foreign partner
(f) Special rules for withholding on dispositions of partnership interests
(1) In general
(2) Exception if nonforeign affidavit furnished
(A) In general
(B) False affidavitSubparagraph (A) shall not apply to any disposition if—
(i) the transferee has actual knowledge that the affidavit is false, or the transferee receives a notice (as described in section 1445(d)) from a transferor’s agent or transferee’s agent that such affidavit or statement is false, or
(ii) the Secretary by regulations requires the transferee to furnish a copy of such affidavit or statement to the Secretary and the transferee fails to furnish a copy of such affidavit or statement to the Secretary at such time and in such manner as required by such regulations.
(C) Rules for agents
(3) Authority of Secretary to prescribe reduced amount
(4) Partnership to withhold amounts not withheld by the transferee
(5) Definitions
(6) Regulations
(g) RegulationsThe Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this section, including—
(1) regulations providing for the application of this section in the case of publicly traded partnerships, and
(2) regulations providing—
(A) that, for purposes of section 6655, the withholding tax imposed under this section shall be treated as a tax imposed by section 11 and any partnership required to pay such tax shall be treated as a corporation, and
(B) appropriate adjustments in applying section 6655 with respect to such withholding tax.
(Added Pub. L. 99–514, title XII, § 1246(a), Oct. 22, 1986, 100 Stat. 2582; amended Pub. L. 100–647, title I, § 1012(s)(1)(A), Nov. 10, 1988, 102 Stat. 3526; Pub. L. 101–239, title VII, § 7811(i)(6), Dec. 19, 1989, 103 Stat. 2410; Pub. L. 115–97, title I, §§ 13001(b)(3)(D), 13501(b), Dec. 22, 2017, 131 Stat. 2098, 2139; Pub. L. 115–141, div. U, title IV, § 401(a)(199), Mar. 23, 2018, 132 Stat. 1193.)