Treasury Decision 2313

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Treasury Decision 2313

                               Treasury Decisions
                           Under Internal Revenue Laws
                              of the United States

                                     Vol. 18

                              January-December 1916

                                  W. G. McAdoo
                            Secretary of the Treasury

                           Government Printing Office

                                   (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 [sic]  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
        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.

             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


Regarding the misrepresentation of Treasury Decision 2313

Nonresident Aliens and Citizens The Camel Sneezes

Llstuler's Blog

Tax Freedom 101

Notice to Citizens

Phil Hart Problems With The Income Tax


Research Law Research and Registry

The 1913 Income Tax

Larken Rose Taxable Income Report

Carl Miller, Know Your Constitution Part 1 of 3
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