Payment of tax on.-Income derived by nonresident aliens from 219 sources in the United States is subject to the normal or additional tax, or both, as the case may be, and said tax shall be paid by the owner of said income, or the proper representative of the nonresident alien having the receipt, custody, control, or disposal of the same. In all cases the proper representative in the United States of a nonresident alien, with respect to such income, shall make return for such nonresident of all such income coming into his custody or control and pay the tax thereon as provided by law; provided, however, where all income shall have been paid over by the representative to his principal on or before October 3, 1917, under the law and income tax regulations in force up to that date, or where the stockholder of record shall not-between October 3 and December 31, 1917—be in receipt of or have in his custody or control income the property of his said principal, such representative will be relieved from paying said tax, leaving the same a charge against the nonresident alien and to be collected from him by any means at the disposal of the Commissioner of Internal Revenue; but where such representative shall have in his possession, custody, or control subsequent to October 3, 1917, income of such nonresident alien, said representative shall pay the total tax due upon the income of such nonresident alien so in his custody and control for the entire year 1917 and subsequent years.

Exempt income.-Nonresident aliens will not be required to make 220 return of any of the classes of income specified by section 4, act of September 8, 1916, as amended, and received by them from sources in the United States. (See art. 5.)

RULINGS UNDER ARTICLE 32.

Salary, rents, etc.—It is held that salaries, wages, commissions, and 221 rents paid by domestic corporations, resident individuals, or partnerships to nonresident alien employees for services rendered entirely in a foreign country and for property located in a foreign country are not subject to deduction and withholding of the normal tax and such payments of income will not be subject to the income tax in the hands of the recipient as from a source within the United States.

Refund, on return.-Where, upon filing return of income, it appears that a nonresident alien is not liable for income tax, but, nevertheless, income tax shall have been withheld at the source, in order. to obtain a refund on the basis of the showing made by the return there shall be attached to the return a statement showing accurately the amounts of tax withheld, with the names and post-office addresses of all withholding agents.

222

Return by agent.-The agent of a nonresident alien is responsible 223 for a correct return of all income accruing to his principal within the

purview of the agency, and the agent will be held responsible for a complete return of all such income. The agency appointment will determine how completely the agent is substituted for the principal for income-tax purposes.

224 Foreign corporations-Dividends on stock.-Dividends on stock of domestic corporations or resident alien corporations are held, prima facie, to be income of the record owner of the stock, and such record owner will be liable for the income tax, normal or additional, according to his or its individual or corporate status unless a disclosure of actual ownership is made to the Commissioner of Internal Rev enue which shall show who the owner is and his address, and that the record owner is not the actual owner.

225

When the record owner of such stock is a nonresident alien corporation, etc., not having an office or place of business in the United States, the debtor corporation will withhold the normal income tax and pay the same to the proper officer of the United States authorized to receive it in manner and form provided for withholding and accounting for tax withheld.

226 In all cases where the actual owner is a nonresident alien individual

or corporation, and the record owner is an individual, firm, or corporation in the United States (a citizen or resident alien), and the aforesaid showing of actual ownership is made, the record owner will be held, for income-tax purposes, to have the receipt, custody, control, and disposal of the dividend income and will be required to make return for the actual owner and pay the tax found by such return to be due. Where the actual owner is a nonresident alien corporation, return will be made regardless of the amount of dividend and the normal income tax will be paid,. and when the actual owner is a nonresident alien individual, a return shall be made regardless of the amount of the income, and when the net amount of such income exceeds $5,000 said custodian shall also pay the additional tax on such income. When it shall appear from the disclosure herein provided for that the actual owner is a nonresident alien partnership, all certificates making such disclosure shall be transferred to the Commissioner of Internal Revenue for the information of the collector of internal revenue, but no return will be made for such partnership and no amount will be retained from such income by the representative of such partnership in the United States unless and until such representative shall be so instructed by the Commissioner of Internal Revenue. When a nonresident alien record owner of stock of domestic or resident corporations is an organization subject to withholding at the source of dividend payments, but is not the actual owner of the stock, such record owner may make disclosure, in form prescribed by the Commissioner of

Internal Revenue, of actual ownership, in which case said domestic or resident corporations will be governed by the established facts.

If the record owner does not exercise his right to disclose actual 227 ownership for the purpose of claiming exemption from having tax withheld at the source, debtor corporations and their withholding agents in the United States will be held liable on their stock records of ownership for the tax required to be withheld by section 13 (ƒ) of the act of September 8, 1916.

In the absence of disclosure of actual ownership filed with debtor 228 corporations or their withholding agents, in manner and form provided for, the normal tax required to be withheld in accordance with stock records of ownership can only be released to a record owner not liable for tax upon a proper showing to the Commissioner of Internal Revenue of record and actual ownership, the names and post-office addresses of debtor corporations and withholding agents, and the amounts withheld.

The record owner is held to be "the proper representative having 229 the receipt, custody, control, or disposal" of income of the actual owner and is required to file a return for or on behalf of the actual owner for the purpose of assessment of income tax not withheld at the source.

When a return is not required to be filed by or on behalf of the 230 actual owner, the showing may be made upon the certification of the record owner.

Upon the showing thus made, either by certification or return, as 231 the circumstances may require, the Commissioner of Internal Revenue will make such assessments and issue such instructions to debtors and withholding agents as will insure the proper collection of tax in accordance with the respective tax liabilities.

INFORMATION AT THE SOURCE.

Art. 33. Every person, corporation, partnership, or association 232 doing business as a broker on any exchange or board of trade or other similar place of business, shall, upon request of the Commissioner of Internal Revenue, render a correct return under oath, on a form furnished by the Commissioner of Internal Revenue for that purpose, showing the names of customers for whom such person, corporation, partnership, or association has transacted any business, with such details as to the profits, losses, or other information as may be called for by such return form as to each of such customers. See special regulations No. 40.

Art. 34. Every person, corporation, partnership, association, and 233 insurance company, in whatever capacity acting, including lessees or mortgagors of real or personal property, trustees acting in any trust

capacity, executors, administrators, receivers, conservators, and employers, making payment to another person, corporation, partnership, association, or insurance company of interest, rent, salaries, wages, premiums, annuities, compensation, remuneration, emoluments, or other fixed or determinable gains, profits, and income (other than payments coming within the paragraph next above and dividend payments under sec. 26) of $800 or more in any taxable year, or, in the case of such payments made by the United States, the officers or employees of the United States having information as to such payments, are hereby authorized and required to render a true and accurate return to the Commissioner of Internal Revenue, on the form prescribed for that purpose (Form 1099), setting forth the amount of such gains, profits, and income and the name and address of the recipients of such income.

234 Letter of transmittal.-Returns of information for the preceding calendar year shall be filed with the Commissioner of Internal Revenue on or before March 1 of each year, accompanied by a letter of transmittal, under oath (Form 1096), which will show the number of returns filed and the aggregate amount represented by the payments. 235 Salary and commission.-Where a person receives a cash compensation for services rendered and in addition thereto living quarters, the value to such person of the quarters furnished constitutes income subject to tax. A return under section 28 is required in each case where the cash compensation received plus the value of living quarters furnished equals or exceeds $800 for a tax year.

236

Art. 35. Such returns of information shall be required, regardless of amount, in the case of payments of interest upon bonds, mortgages, or deeds of trust or other similar obligations of corporations, joint-stock companies, associations, and insurance companies; and in the case of collection of items (not payable in the United States) of interest upon the bonds of foreign countries and interest on the bonds and dividends on the stock of foreign corporations by persons, corporations, partnerships, or associations undertaking as a matter of business or for profit the collection of foreign payments of such interest or dividends by means of coupons, checks, or bills of exchange.

237 In the case of items (payable in the United States) of interest upon bonds of foreign countries and interest upon bonds and dividends from stocks of foreign corporations the fiscal agent in the United States will be the source for purposes of information. If no ownership certificate is received with the item, the first bank or collection agent receiving the same shall execute a certificate, Form 1001, showing the name and address of the owner, if known, or, the person presenting the item, which certificate shall be forwarded to the fiscal

agent in the same manner as if the certificate had been signed by the

owner.

In the case of such foreign items (not payable in the United 238 States) the same may be accepted for collection only by a licensed bank or agent, and the latter will be held to be the source for the purposes of the return of information.

The original ownership certificates, accompanied by the monthly 239 list returns, in the case of interest on bonds of domestic and resident corporations, when filed with the Commissioner of Internal Revenue shall constitute and be treated as returns of information.

Art. 36. When the person receiving a payment falling within the 240 provisions of law for information at the source is not the actual owner of the income received, the name and address of the actual owner shall be furnished upon demand of the person, corporation, partnership, or association paying the income, and in default of a compliance with such demand the payee becomes liable to a penalty of not less than $20 nor more than $1,000.

Art. 37. The requirement of law for information at the source 241 shall not apply to the payment of interest on obligations of the United States.

ASSESSMENT OF TAX.

Art. 38. The assessment of income tax shall be made by the Com- 242 missioner of Internal Revenue and all persons shall be notified of the amount for which they are, respectively, liable on or before the first day of June of each successive year.

Three years' limitation. The statute (sec. 9 (a), act Sept. 8, 1916) 243 does not require the assessment to be made within three years from the time a return was due. The limitation is upon the discovery of delinquency or error, within three years.

Amended return.—Where a further tax is found to be due as result 244 of audit of a return or agent's report, an amended return or waiver will not be required, except where the discovery of the tax is made subsequent to the expiration of the three-year period of limitation. Effective date of Treasury decisions.-Treasury decisions promul- 245 gating rulings of the Internal Revenue Bureau become effective upon the date of approval unless otherwise stated therein. Cases previously adjusted in contravention of law as pronounced in such decisions, are subject to readjustment in accordance with the decision.

COLLECTION OF THE TAX.

Art. 39. The tax is to be paid upon notice from a collector of 246 internal revenue of the amount of tax due and at all events not later than June 15. As to all tax unpaid on June 15 and fo: 10 days