












                           Appendix C
                                
                     Treasury Decision 2313








































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Reader's Notes:























































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                                                       Appendix C










                       Treasury Decisions
                                
                                
                   Under Internal Revenue Laws
                      of the United States
                                
                                
                                
                                
                                
                             Vol. 18
                                
                                
                                
                      January-December 1916
                                
                                
                                
                                
                                
                                
                          W. G. McAdoo
                    Secretary of the Treasury
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                           Washington
                   Government Printing Office
                              1917
                                











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                           (T.D. 2313)
                           Income Tax
                                
Taxability of  interest from  bonds and  dividends  on  stock  of
domestic  corporations  owned  by  nonresident  aliens,  and  the
liabilities of  nonresident aliens  under section 2 of the act of
October 3, 1913.

                                              Treasury Department
                       Office of Commissioner of Internal Revenue
                                  Washington D.C., March 21, 1916
                                                                 

To collectors of internal revenue:

     Under the decision of the Supreme Court of the United States
in the  case of  Brushaber v.  Union Pacific Railway Co., decided
January 24,  1916, it  is hereby  held that  income  accruing  to
nonresident aliens  in the  form of  interest from  the bonds and
dividends on the stock of domestic corporations is subject to the
income tax imposed by the act of October 3, 1913.

     Nonresident  aliens   are  not   entitled  to  the  specific
exemption designated  in paragraph  C of  the income-tax law, but
are liable  for the normal and additional tax upon the entire net
income "from all property owned, and of every business, trade, or
profession carried  on in  the United  States," computed upon the
basis prescribed in the law.

     The  responsible   heads,  agents,   or  representatives  of
nonresident aliens,  who are  in charge  of the property owned or
business carried  on within  the United States, shall make a full
and complete  return  of  the  income  therefrom  on  Form  1040,
revised, and  shall pay  any and  all tax, normal and additional,
assessed upon  the income  received by  them in  behalf of  their
nonresident alien principals.

     The  person,   firm,  company,  copartnership,  corporation,
joint-stock company, or association, and insurance company in the
United States,  citizen or  resident alien,  in whatever capacity
acting, having  the control,  receipt, disposal,  or  payment  of
fixed or  determinable annual  or periodic  gains,  profits,  and
income of  whatever kind,  to  a  nonresident  alien,  under  any
contract or  otherwise, which payment shall represent income of a
nonresident alien  from the  exercise of  any trade or profession
within the  United States,  shall deduct  and withhold  from such
annual or  periodic gains,  profits, and  income,  regardless  of
amount, and  pay to  the officer  of the United States Government
authorized to  receive the same such sum as will be sufficient to
pay the  normal tax  of 1 per cent imposed by law, and shall make
an annual return on Form 1042.

     The normal  tax shall  be withheld at the source from income
accrued to  nonresident aliens  from  corporate  obligations  and


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shall  be   returned  and   paid  to  the  Government  by  debtor
corporations and  withholding agents  as in  the case of citizens
and  resident   aliens,  but  without  benefit  of  the  specific
exemption designated in paragraph C of the law.

     Form 1008,  revised, claiming the benefit of such deductions
as may  be applicable  to income arising within the United States
and for  refund of excess tax withheld, as provided by paragraphs
B and  P of  the income-tax  law, may  be  filed  by  nonresident
aliens,  their   agents  or   representatives,  with  the  debtor
corporation, withholding  agent, or collector of internal revenue
for the  district in  which the withholding return is required to
be made.

     That part  of paragraph E of the law which provides that "if
such person  * *  * is  absent from  the United States, * * * the
return and  application may  be made for him or her by the person
required to  withhold and  pay the  tax *  * *"  is  held  to  be
applicable to  the return  and application on Form 1008, revised,
of nonresident aliens.

     A fiduciary  acting in the capacity of trustee, executor, or
administrator, when  there  is  only  one  beneficiary  and  that
beneficiary a  nonresident alien,  shall render  a return on Form
1040, revised;  but when there are two or more beneficiaries, one
or all of whom are nonresident aliens, the fiduciary shall render
a return  on Form  1041, revised,  and a  personal return on Form
1040, revised, for each nonresident alien beneficiary.

     The liability,  under the  provisions of  the law, to render
personal returns,  on or  before March  1 next succeeding the tax
year, of  annual net  income accrued  to them from sources within
the United States during the preceding calendar year, attaches to
nonresident aliens  as in  the  case  of  returns  required  from
citizens and  resident aliens.  Therefore, a return on Form 1040,
revised,  is  required  except  in  cases  where  the  total  tax
liability has  been or  is to  be  satisfied  at  the  source  by
withholding or  has been or is to be satisfied by personal return
on Form  1040, revised,  rendered in their behalf.  Returns shall
be rendered to the collector of internal revenue for the district
in which  a nonresident  aliens carries on his principal business
within the  United States  or, in  the  absence  of  a  principal
business within  the United States and in all cases of doubt, the
collector  of  internal  revenue  at  Baltimore,  Md.,  in  whose
district Washington is situated.

     Nonresident aliens are held to be subject to the liabilities
and requirements  of all  administrative,  special,  and  general
provisions of  law in  relation  to  the  assessment,  remission,
collection, and  refund of  the income  tax imposed by the act of
October 3,  1913, and  collectors of  internal revenue  will make
collection of  the tax  by distraint,  garnishment, execution, or
other appropriate process provided by law.



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     So much  of T.D.  1976 as  relates to  ownership certificate
1004, T.D.  1977 (certificate  Form 1060), 1988 (certificate Form
1060), T.D.  2017  (nontaxability  of  interest  from  bonds  and
dividends on stock), T.D. 2030 (certificate Form 1071), T.D. 2162
(nontaxability of interest from bonds and dividends on stock) and
all rulings  heretofore made  which are  in conflict herewith are
hereby superseded and repealed.

     This decision will be held effective as of January 1, 1916.


                                                     W. H. Osborn
                                 Commissioner of Internal Revenue
                                                                 
                                                                 
Approved, March 30, 1916:

Byron R. Newton,
Acting Secretary of the Treasury


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