Amended 1976
- 1976 Pub. L. 94-455 Pub. L. 94–455 struck out in subsecs. (a), (c)(2), (4), (8), (d), “or his delegate” after “Secretary”.
Cases: Northern Ind. Pub. Serv. Co. v. Commissioner, 105 T.C. 341 (1995); Coldwater Seafood Corp. v. Commissioner, 69 T.C. 966 (1978)
Forms: Form W-9; Form 1042-S; Form 8233; Form 1042
Final rules 19
(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.
Amended 1961, 1964, 1966, 1984
- 1984 Pub. L. 98-369 Pub. L. 98–369, § 474(r)(29)(G), struck out “except in the cases provided for in section 1451 and” before “except as otherwise provided in regulations”.
- 1966 Pub. L. 89-809 Pub. L. 89–809, § 103(h)(1), substituted “or of any foreign partnership” for “, or of any partnership not engaged in trade or business within the United States and composed in whole or in part of nonresident aliens,”.
- 1964 Pub. L. 88-272 Pub. L. 88–272 reduced the withholding rate from 18% to 14%.
- 1961 Pub. L. 87-256 Pub. L. 87–256, § 110(d)(1), required a tax equal to 18 percent of the item in the case of any item of income specified in second sentence of subsection (b).
Cases: Casa de La Jolla Park, Inc. v. Commissioner, 94 T.C. 384 (1990)
Cited by 34
(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), 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—
Amended 1958, 1961, 1964, 1966, 1971, 1984, 1986, 1988, 1992, 1994, 2014
- 2014 Pub. L. 113-295 Pub. L. 113–295 substituted “and gains subject to tax under section 871(a)(1)(D)” for “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”.
- 1994 Pub. L. 103-296 Pub. L. 103–296 substituted “(J), (M), or (Q)” for “(J), or (M)”.
- 1992 Pub. L. 102-318 Pub. L. 102–318 struck out “402(a)(2), 403(a)(2), or” before “631(b)”.
- 1988 Pub. L. 100-647 Pub. L. 100–647, § 1001(d)(2)(A), amended second sentence generally. Prior to amendment, second sentence read as follows: “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) or (J) of section 101(a)(15) of the Immigration and Nationality Act and which are incident to a qualified scholarship to which section 117(a) applies, but only to the extent such amounts are includible in gross income.”
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 123(b)(2), amended second sentence generally. Prior to amendment, second sentence read as follows: “The items of income referred to in subsection (a) from which tax shall be deducted and withheld at the rate of 14 percent are—
“(1) that portion of any scholarship or fellowship grant which is received by a nonresident alien individual who is temporarily present in the United States as a nonimmigrant under subparagraph (F) or (J) of section 101(a)(15) of the Immigration and Nationality Act, as amended, and which is not excluded from gross income under section 117(a)(1) solely by reason of section 117(b)(2)(B); and
“(2) amounts described in subparagraphs (A), (B), (C), and (D) of section 117(a)(2) which are received by any such nonresident alien individual and which are incident to a scholarship or fellowship grant to which section 117(a)(1) applies, but only to the extent such amounts are includable in gross income.”
- 1984 Pub. L. 98-369 Pub. L. 98–369, § 42(a)(13), substituted “section 1273” for “section 1232(b)”.
- 1971 Pub. L. 92-178 Pub. L. 92–178, § 313(a), inserted “(other than original issue discount as defined in section 1232(b))” after “interest”.
- 1966 Pub. L. 89-809 Pub. L. 89–809, § 103(h)(2)–(4), struck out “(except interest on deposits with persons carrying on the banking business paid to persons not engaged in business in the United States)” after “The items of income referred to in subsection (a) are interest” and substituted “gains described in section 402(a)(2), 403(a)(2), or 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” for “and amounts described in section 402(a)(2), section 403(a)(2), section 631(b) and (c), and section 1235, which are considered to be gains from the sale or exchange of capital assets” in text preceding par. (1), and inserted provision for treatment of items of income referred to in subsec. (a) in the case of nonresident alien individuals who are members of domestic partnerships.
- 1964 Pub. L. 88-272 Pub. L. 88–272 reduced the withholding rate from 18% to 14%.
- 1961 Pub. L. 87-256 Pub. L. 87–256, § 110(d)(2), inserted provisions listing items of income from which tax shall be deducted and withheld at the rate of 18 percent.
- 1958 Pub. L. 85-866 Pub. L. 85–866 inserted “section 403(a)(2),” after “section 402(a)(2),”.
Cited by 10
(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—
Amended 1990
- 1990 Pub. L. 101-508 Pub. L. 101–508 inserted “section” before “170(b)(1)(A)(ii)”.
(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
Cited by 2
(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.
Amended 1966
- 1966 Pub. L. 89-809 Pub. L. 89–809, § 103(h)(5), substituted “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” for “in the case of dividends paid by a foreign corporation unless (A) such corporation is engaged in trade or business within the United States, and (B) more than 85 percent of the gross income of such corporation for the 3-year period ending with the close of its taxable year preceding the declaration of such dividends (or for such part of such period as the corporation has been in existence) was derived from sources within the United States as determined under part I of subchapter N of chapter 1” after “shall be required”.
Cited by 5
(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 27½ percent of the interest, shall not exceed the rate of 27½ percent per annum.
Amended 1984
- 1984 Pub. L. 98-369 Pub. L. 98–369, § 474(r)(29)(H), inserted “(as in effect before its repeal by the Tax Reform Act of 1984)”.
(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).
Amended 1961, 1966
- 1966 Pub. L. 89-809 Pub. L. 89–809, § 103(h)(6), struck out provisions which had served to limit to compensation for personal services of nonresident alien individuals who enter and leave the United States at frequent intervals and of nonresident alien individuals for the period they are temporarily present in the United States as a nonimmigrant under subparagraph (F) and (J) of section 101(a)(15) of the Immigration and Nationality Act, as amended, the application of the exemption from deduction and withholding under subsec. (a), leaving the exemption under subsec. (a) applicable to compensation for personal services without further limitation.
- 1961 Pub. L. 87-256 Pub. L. 87–256, § 110(d)(3), authorized the exemption from deduction and withholding of the compensation for personal services of a nonresident alien individual for the period he is temporarily present in the United States as a nonimmigrant under subpar. (F) or (J) of section 101(a)(15) of the Immigration and Nationality Act, as amended.
Cited by 2
(5) Special items In the case of gains described in section 631(b) or (c), and gains subject to tax under section 871(a)(1)(D), 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.
Amended 1958, 1966, 1992, 2014
- 2014 Pub. L. 113-295 Pub. L. 113–295 substituted “and gains subject to tax under section 871(a)(1)(D)” for “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”.
- 1992 Pub. L. 102-318 Pub. L. 102–318 struck out “402(a)(2), 403(a)(2), or” before “631(b)”.
- 1966 Pub. L. 89-809 Pub. L. 89–809, § 103(h)(7), substituted “gains described in section 402(a)(2), 403(a)(2), or 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,” for “amounts described in section 402(a)(2), section 403(a)(2), section 631(b) and (c), and section 1235, which are considered to be gains from the sale or exchange of capital assets,” and “amounts payable,” for “proceeds from such sale or exchange,”.
- 1958 Pub. L. 85-866 Pub. L. 85–866 inserted “section 403(a)(2),” after “section 402(a)(2),”.
Cited by 1
(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.
Amended 1956
- 1956 Act July 18, 1956, added section 544(f) to act Aug. 26, 1954, which section amended this subsection by adding par. (6).
Cited by 2
(7) Certain annuities received under qualified plans No deduction or withholding under subsection (a) shall be required in the case of any amount received as an annuity if such amount is, under section 871(f), exempt from the tax imposed by section 871(a).
Amended 1966
- 1966 Pub. L. 89-809 Pub. L. 89–809, § 103(h)(8), added par. (7).
Cited by 1
(8) Original issue discount The Secretary may prescribe such regulations as may be necessary for the deduction and withholding of the tax on original issue discount subject to tax under section 871(a)(1)(C) including rules for the deduction and withholding of the tax on original issue discount from payments of interest.
Amended 1971
- 1971 Pub. L. 92-178 Pub. L. 92–178, § 313(d), added par. (8).
Cited by 1
(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).
Amended 1984, 1986, 1993
- 1993 Pub. L. 103-66 Pub. L. 103–66 substituted “section 871(h)(3) or (4)” for “section 871(h)(3)”.
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 1810(d)(3)(D), substituted “section 871(h)” for “871(h)(2)”.
- 1984 Pub. L. 98-369 Pub. L. 98–369, § 127(e)(1), added par. (9).
Cited by 2
(10) Exception for certain interest and dividends No tax shall be required to be deducted and withheld under subsection (a) from any amount described in section 871(i)(2).
Amended 1986
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 1214(c)(3), added par. (10).
Cited by 4
(11) Certain gambling winnings No tax shall be required to be deducted and withheld under subsection (a) from any amount exempt from the tax imposed by section 871(a)(1)(A) by reason of section 871(j).
Amended 1988
- 1988 Pub. L. 100-647 Pub. L. 100–647, § 6134(a)(2), added par. (11).
Cited by 1
(12) Certain dividends received from regulated investment companies
Amended 2004
- 2004 Pub. L. 108-357 Pub. L. 108–357 added par. (12).
Cited by 1
(A) In general No tax shall be required to be deducted and withheld under subsection (a) from any amount exempt from the tax imposed by section 871(a)(1)(A) by reason of section 871(k).
Cited by 2
(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.
Amended 1966
- 1966 Pub. L. 89-809 Pub. L. 89–809, § 103(h)(9), added subsec. (d) and redesignated former subsec. (d) as (e).
(e) Alien resident of Puerto Rico For purposes of this section, the term “nonresident alien individual” includes an alien resident of Puerto Rico.
Amended 1966
- 1966 Pub. L. 89-809 Pub. L. 89–809, § 103(h)(9), added subsec. (d) and redesignated former subsec. (d) as (e).
Cited by 1
(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.
Amended 1969
- 1969 Pub. L. 91-172 Pub. L. 91–172 added subsec. (f).
(g) Cross reference For provision treating 85 percent of social security benefits as subject to withholding under this section, see section 871(a)(3).
Amended 1983, 1997
- 1997 Pub. L. 105-34 Pub. L. 105–34 substituted “85 percent” for “one-half”.
- 1983 Pub. L. 98-21 Pub. L. 98–21 added subsec. (g).