# 26 U.S.C. § 1442: Withholding of tax on foreign corporations Source: OLRC release point 119-134 . Cite pinpoints as 26 U.S.C. § 1442(a)(1). ## § 1442(a) General rule In the case of foreign corporations subject to taxation under this subtitle, there shall be deducted and withheld at the source in the same manner and on the same items of income as is provided in section 1441 a tax equal to 30 percent thereof. For purposes of the preceding sentence, the references in section 1441(b) to sections 871(a)(1)(C) and (D) shall be treated as referring to sections 881(a)(3) and (4), the reference in section 1441(c)(1) to section 871(b)(2) shall be treated as referring to section 842 or section 882(a)(2), as the case may be, the reference in section 1441(c)(5) to section 871(a)(1)(D) shall be treated as referring to section 881(a)(4), the reference in section 1441(c)(8) to section 871(a)(1)(C) shall be treated as referring to section 881(a)(3), the references in section 1441(c)(9) to sections 871(h) and 871(h)(3) or (4) shall be treated as referring to sections 881(c) and 881(c)(3) or (4), the reference in section 1441(c)(10) to section 871(i)(2) shall be treated as referring to section 881(d), and the references in section 1441(c)(12) to sections 871(a) and 871(k) shall be treated as referring to sections 881(a) and 881(e) (except that for purposes of applying subparagraph (A) of section 1441(c)(12), as so modified, clause (ii) of section 881(e)(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). ## § 1442(b) Exemption 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 corporation 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 881 on such corporation will not be jeopardized by the exemption. ## § 1442(c) Exception for certain possessions corporations **§ 1442(c)(1) Guam, American Samoa, the Northern Mariana Islands, and the Virgin Islands.** For purposes of this section, the term “foreign corporation” does not include a corporation created or organized in Guam, American Samoa, the Northern Mariana Islands, or the Virgin Islands or under the law of any such possession if the requirements of subparagraphs (A), (B), and (C) of section 881(b)(1) are met with respect to such corporation. **§ 1442(c)(2) Commonwealth of Puerto Rico.** **§ 1442(c)(2)(A) In general.** If dividends are received during a taxable year by a corporation— **§ 1442(c)(2)(A)(i)** created or organized in, or under the law of, the Commonwealth of Puerto Rico, and **§ 1442(c)(2)(A)(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”. **§ 1442(c)(2)(B) Applicability.** If, on or after the date of the enactment of this paragraph, an increase in the rate of the Commonwealth of Puerto Rico’s withholding tax which is generally applicable to dividends paid to United States corporations not engaged in a trade or business in the Commonwealth to a rate greater than 10 percent takes effect, this paragraph shall not apply to dividends received on or after the effective date of the increase. ## Regulations - [Treas. Reg. § 1.1442-1](/26/reg/1.1442-1.md): Withholding of tax on foreign corporations. (interprets § 1442) - [Treas. Reg. § 1.1442-2](/26/reg/1.1442-2.md): Exemption under a tax treaty. (interprets § 1442) - [Treas. Reg. § 1.1442-3](/26/reg/1.1442-3.md): Tax exempt income of a foreign tax-exempt corporation. (interprets § 1442) ## Final rules - [62 FR 53387](https://www.federalregister.gov/documents/1997/10/14/97-25998/general-revision-of-regulations-relating-to-withholding-of-tax-on-certain-us-source-income-paid-to) (1997): General Revision of Regulations Relating to Withholding of Tax on Certain U.S. Source Income Paid to Foreign Persons and Related Collection, Refunds, and Credits; Revision of Information Reporting and Backup Withholding Regulations; and Removal of Regulations Under Part 35a and of Certain Regulations Under Income Tax Treaties ## Leading cases - [R. T. French Co. v. Commissioner, 60 T.C. 836 (1973)](https://www.courtlistener.com/opinion/4703732/r-t-french-co-v-commissioner/) - [Vitco, Inc. v. Government of the Virgin Islands, 560 F.2d 180 (3rd Cir. 1977)](https://www.courtlistener.com/opinion/348325/vitco-inc-v-government-of-the-virgin-islands-and-reuben-wheatley/) - [Husky Oil Co. v. Commissioner, 83 T.C. 717 (1984)](https://www.courtlistener.com/opinion/4706054/husky-oil-co-v-commissioner/) ## Connections Cites: § 842 Foreign companies carrying on insurance business; § 871 Tax on nonresident alien individuals; § 881 Tax on income of foreign corporations not connected with United States business; § 882 Tax on income of foreign corporations connected with United States business; § 1441 Withholding of tax on nonresident aliens Cited by: § 12 Cross references relating to tax on corporations; § 565 Consent dividends; § 881 Tax on income of foreign corporations not connected with United States business; § 885 Cross references; § 3402 Income tax collected at source Derived from: 1939 § 144 ## Amendments - 1954-08-16: [Act Aug. 16, 1954, ch. 736](/26/act/1954-ch736.md), 68A Stat. 358 - 1966-11-13: [Pub. L. 89-809](/26/act/89-809.md), 80 Stat. 1557 - 1971-12-10: [Pub. L. 92-178](/26/act/92-178.md), 85 Stat. 528 - 1972-10-31: [Pub. L. 92-606](/26/act/92-606.md), 86 Stat. 1497 - 1976-10-04: [Pub. L. 94-455](/26/act/94-455.md), 90 Stat. 1834 - 1984-07-18: [Pub. L. 98-369](/26/act/98-369.md), 98 Stat. 652 - 1986-10-22: [Pub. L. 99-514](/26/act/99-514.md), 100 Stat. 2596 - 1988-11-10: [Pub. L. 100-647](/26/act/100-647.md), 102 Stat. 3501 - 1993-08-10: [Pub. L. 103-66](/26/act/103-66.md), 107 Stat. 508 - 2004-10-22: [Pub. L. 108-357](/26/act/108-357.md), 118 Stat. 1504