Partnerships

own fiscal year

this title, and the names and addresses of the individuals who would be entitled to the net earnings, profits, and income, if distributed. A partnership shall have the same privilege of fixing and making returns upon the basis of its own fiscal year as is accorded to corporations under this title. If a fiscal year ends during nineteen hun- may ax their dred and sixteen or a subsequent calendar year for which there is a rate of tax different from the rate for the preceding calendar year, then (1) the rate for such preceding calendar year shall apply to an amount of each partner's share of such part- calculation of nership profits equal to the proportion which the year of part of such fiscal year falling within such calen- partnership dar year bears to the full fiscal year, and (2) the rate for the calendar year during which such fiscal year ends shall apply to the remainder."

(2) Subdivision (d) of section eight of such Act of September eighth, nineteen hundred and sixteen, is hereby repealed.

SEC. 1205. (1) That subdivisions (b), (c), (f), and (g) of section nine of such Act of September eighth, nineteen hundred and sixteen, are hereby amended to read as follows:

Method of

tax for fiscal

Repeal of (Sec. relating to

8, d) provision

withholding at

source

sec. 9, (b), (e),
Amendment to
(1), and (g)

source applies

accruing to non

except income

"(b) All persons, corporations, partnerships, withholding at associations, and insurance companies, in what- to income ever capacity acting, including lessees or mortgag- resident aliens, ors of real or personal property, trustees acting in from dividends any trust capacity, executors, administrators, receivers, conservators, employers, and all officers and employees of the United States, having the control, receipt, custody, disposal, or payment of interest, rent, salaries, wages, premiums, annuities, compensation, remuneration, emoluments, or other fixed or determinable annual or periodical gains, profits, and income of any nonresident alien individual, other than income derived from dividends on capital stock, or from the net earnings of a

Returns and payment of tax withheld to the government

Withholding at source applies

to normal tax on interest from

"tax-free"

person entitled to same files with withholding agent a claim for exemption granted under Sec. 7

corporation, joint-stock company or association, or insurance company, which is taxable upon its net income as provided in this title, are hereby authorized and required to deduct and withhold from such annual or periodical gains, profits, and income such sum as will be sufficient to pay the normal tax imposed thereon by this title, and shall make return thereof on or before March first of each year and, on or before the time fixed by law for the payment of the tax, shall pay the amount withheld to the officer of the United States Government authorized to receive the same; and they are each hereby made personally liable for such tax, and they are each hereby indemnified against every person, corporation, partnership, association, or insurance company, or demand whatsoever for all payments which they shall make in pursuance and by virtue of this title.

"(c) The amount of the normal tax hereinbefore imposed shall also be deducted and withbonds containing held from fixed or determinable annual or periodcovenant, unless ical gains, profits, and income derived from interest upon bonds and mortgages, or deeds of trust or other similar obligations of corporations, jointstock companies, associations and insurance companies (if such bonds, mortgages, or other obligations contain a contract or provision by which the obligor agrees to pay any portion of the tax imposed by this title upon the obligee or to reimburse the obligee for any portion of the tax or to pay the interest without deduction for any tax which the obligor may be required or permitted to pay thereon or to retain therefrom under any law of the United States), whether payable annually or at shorter or longer periods and whether such interest is payable to a non-resident alien individual or to an individual citizen or resident of the United States, subject to the provisions of the foregoing subdivision (b) of this section requiring the tax to

be withheld at the source and deducted from annual income and returned and paid to the Government, unless the person entitled to receive such interest shall file with the withholding agent, on or before February first, a signed notice in writing claiming the benefit of an exemption under section seven of this title.

foreign interest

payments must information as

"(f) All persons, corporations, partnerships, or associations, undertaking as a matter of busi- collectors of ness or for profit the collection of foreign pay- and dividend ments of interest or dividends by means of cou- furnish pons, checks, or bills of exchange shall obtain a to recipients license from the Commissioner of Internal Revenue, and shall be subject to such regulations enabling the Government to obtain the information required under this title, as the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, shall prescribe; and whoever knowingly undertakes to collect such payments as aforesaid without having obtained a license therefor, or without complying with such regulations, shall be deemed guilty of a misdemeanor and for each offense be fined in a sum not exceeding $5,000, or imprisoned for a term not exceeding one year, or both, in the discretion of the court.

"(g) The tax herein imposed upon gains, profits, and incomes not falling under the foregoing and not returned and paid by virtue of the foregoing or as otherwise provided by law shall be assessed by personal return under rules and regulations to be prescribed by the Commissioner of Internal Revenue and approved by the Secretary of the Treasury. The intent and purpose of this title is that all gains, profits, and income of a taxable class, as defined by this title, shall be charged and assessed with the corresponding tax, normal and additional, prescribed by this title, and said tax shall be paid by the owner of such income, or the proper representative having the receipt, cus

D

nal

ceived from all sources, corporate or otherwise, in the United States, in the manner prescribed by this title; and in case of his failure to file such return the collector shall collect the tax on such income, and all property belonging to such nonresident alien individual shall be liable to distraint for the tax.'

SEC. 1203. (1) That section seven of such Act of September eighth, nineteen hundred and sixteen, is hereby amended to read as follows:

"SEC. 7. That for the purpose of the normal to tax only, there shall be allowed as an exemption in the nature of a deduction from the amount of the net income of each citizen or resident of the United States, ascertained as provided herein, the sum of $3,000, plus $1,000 additional if the person making the return be a head of a family or a married man with a wife living with him, or plus the sum of $1,000 additional if the person making the return be a married woman with a husband living with her; but in no event shall this additional exemption of $1,000 be deducted by both a husband al and a wife: Provided, That only one deduction of $4,000 shall be made from the aggregate income ld of both husband and wife when living together: Provided further, That if the person making the return is the head of a family there shall be an additional exemption of $200 for each child dependent upon such person, if under eighteen years of age, or if incapable of self-support because mentally or physically defective, but this provi

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cestui qu
emption
amount
There sh
the amou
ceased ci
during th
and of t
dents of
not distr
provision
sum of $
allowed u

(2) Act of S sixteen, i

SEC. (e) of s eighth, n amended

"(c) trators, I corporatio ary capad the incom or which visions of Such fidu cient knd trust, or and that

non-resident personal

aliens to obtain

exemption
(which is no
longer allowed
to them)

Amendments to

204. (1) That subdivisions (c) and
tion eight of such Act of September see. 8, (c)
eteen hundred and sixteen, are hereby
read as follows:

and (e)

need make no

not exceeding

Guardians, trustees, executors, adminis- Fiduciaries ceivers, conservators, and all persons, return of income s, or associations, acting in any fiduci- $3,000 Ey, shall make and render a return of of the person, trust, or estate for whom hey act, and be subject to all the prothis title which apply to individuals. iary shall make oath that he has suffiwledge of the affairs of such person, tate to enable him to make such return he same is, to the best of his knowledge

75