§ 1441. Withholding of tax on nonresident aliens
(a)
General rule
Except as otherwise provided in subsection (c), all persons, in whatever capacity acting (including lessees or mortgagors of real or personal property, fiduciaries, employers, and all officers and employees of the United States) having the control, receipt, custody, disposal, or payment of any of the items of income specified in subsection (b) (to the extent that any of such items constitutes gross income from sources within the United States), of any nonresident alien individual or of any foreign partnership shall (except as otherwise provided in regulations prescribed by the Secretary under section
874) deduct and withhold from such items a tax equal to 30 percent thereof, except that in the case of any item of income specified in the second sentence of subsection (b), the tax shall be equal to 14 percent of such item.
(b)
Income items
The 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), gains subject to tax under section
871
(a)(1)(D), and gains on transfers described in section
1235 made on or before October 4, 1966. 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—
(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
No deduction or withholding under subsection (a) shall be required in the case of any item of income (other than compensation for personal services) which is effectively connected with the conduct of a trade or business within the United States and which is included in the gross income of the recipient under section
871
(b)(2) for the taxable year.
(2)
Owner unknown
The Secretary may authorize the tax under subsection (a) to be deducted and withheld from the interest upon any securities the owners of which are not known to the withholding agent.
(3)
Bonds with extended maturity dates
The deduction and withholding in the case of interest on bonds, mortgages, or deeds of trust or other similar obligations of a corporation, within subsections (a), (b), and (c) of section
1451 (as in effect before its repeal by the Tax Reform Act of 1984) were it not for the fact that the maturity date of such obligations has been extended on or after January 1, 1934, and the liability assumed by the debtor exceeds 271/2 percent of the interest, shall not exceed the rate of 271/2 percent per annum.
(4)
Compensation of certain aliens
Under regulations prescribed by the Secretary, compensation for personal services may be exempted from deduction and withholding under subsection (a).
(5)
Special items
In the case of gains described in section
631
(b) or (c), gains subject to tax under section
871
(a)(1)(D), and gains on transfers described in section
1235 made on or before October 4, 1966, the amount required to be deducted and withheld shall, if the amount of such gain is not known to the withholding agent, be such amount, not exceeding 30 percent of the amount payable, as may be necessary to assure that the tax deducted and withheld shall not be less than 30 percent of such gain.
(6)
Per diem of certain aliens
No deduction or withholding under subsection (a) shall be required in the case of amounts of per diem for subsistence paid by the United States Government (directly or by contract) to any nonresident alien individual who is engaged in any program of training in the United States under the Mutual Security Act of 1954, as amended.
(9)
Interest income from certain portfolio debt investments
In the case of portfolio interest (within the meaning of section
871
(h)), no tax shall be required to be deducted and withheld from such interest unless the person required to deduct and withhold tax from such interest knows, or has reason to know, that such interest is not portfolio interest by reason of section
871
(h)(3) or (4).
(12)
Certain dividends received from regulated investment companies
(B)
Special rule
For purposes of subparagraph (A), clause (i) of section
871
(k)(1)(B) shall not apply to any dividend unless the regulated investment company knows that such dividend is a dividend referred to in such clause. A similar rule shall apply with respect to the exception contained in section
871
(k)(2)(B).
(d)
Exemption of certain foreign partnerships
Subject to such terms and conditions as may be provided by regulations prescribed by the Secretary, subsection (a) shall not apply in the case of a foreign partnership engaged in trade or business within the United States if the Secretary determines that the requirements of subsection (a) impose an undue administrative burden and that the collection of the tax imposed by section
871
(a) on the members of such partnership who are nonresident alien individuals will not be jeopardized by the exemption.
(e)
Alien resident of Puerto Rico
For purposes of this section, the term “nonresident alien individual” includes an alien resident of Puerto Rico.
(f)
Continental shelf areas
For sources of income derived from, or for services performed with respect to, the exploration or exploitation of natural resources on submarine areas adjacent to the territorial waters of the United States, see section
638.