RESIDING ABROAD. If a citizen residing abroad has no office or place of business in this country he files his return and pays his tax to the Collector of Internal Revenue at Baltimore, Maryland. He is, of course, required to report his income from all sources whether within or without the United States. Although the question as to the liability of a non-resident citizen is not determined by the State Department but by the Treasury Department, still, in the case of a naturalized citizen against whom the presumption of expatriation has arisen, the fact that he has paid the income tax will receive due consideration by the State Department in connection with other evidence submitted to overcome such presumption in connection with applications for passports or for registration in a consulate or for actual protection in a foreign country. The payment of the income tax will also be duly considered by the State Department in passing upon rights to the continued protection of this Government in cases of native American citizens who have resided abroad for a period so long that the natural presumption may be held to have arisen that they have abandoned citizenship in this country.6

Aliens Residing in the United States. The question of whether or not an alien resides in this country is sometimes difficult to determine. The Treasury Department has held that where for business purposes or otherwise an alien is permanently located in the United States, has there his principal business establishment and is there permanently occupied or employed, even though his domicile may be without the United States,

6 Letter from Secretary of State to American Diplomatic and Consular Officers, dated March 18, 1914.

he will be held to be residing in the United States. On the other hand an alien physically present in the United States, but only temporarily residing or employed here (as for a season or other similiar definite term) and with the expectation of leaving the United States upon the termination of employment or accomplishment of the purpose which necessitates his presence in the United States, will be considered a non-resident." The Treasury Department has adopted the following definition of the word "residence" as used in the income tax laws: "That place where a man has his true, fixed and permanent home and principal establishment, and to which, whenever he is absent, he has the intention of returning; and indicates permanency of occupation as distinct from lodging or boarding, or temporary occupation."8 Aliens coming into the United States with the intention of becoming residents may establish that fact and have the privilege of resident aliens under the statute, by filing a certificate with the withholding agents charged with the duty of withholding the tax on income paid to non-resident aliens.

9

Non-Resident Aliens. Non-resident aliens are those persons who are neither citizens nor residents of this country. As stated above, they are taxable only to the extent of the income they derive from sources

7 This rule differs from the English rule which provides that a person within the United Kingdom for some temporary purpose only for less than six months during the year is not taxable as a resident but after a residence of six months he becomes chargeable with the duties for the year commencing on April 6th preceding.

8 T. D. 2242.

9 T. D. 2242. The certificate to be used is known officially as Form 1078.

within the United States, including interest on bonds, notes or other interest-bearing obligations of residents, corporate or otherwise. If a non-resident alien conducts business through an agent in this country, the agent will be subject to the duty of filing a return for his non-resident principal and of paying both the normal and the supertaxes.10

Husband and Wife. In so far as possible the family is treated as a unit for the purpose of the income tax, and husband and wife are required to make joint returns unless they have separate estates. The personal exemption is in such cases deducted from the joint income, but the surtax is in all cases imposed upon the separate incomes.11

Minors. Minors are unable to make returns for themselves, and such returns are required to be made by their guardians.12 If the minor has a separate legal estate a separate return is made of his income, but where a minor child has received gifts of money and other property from relatives and the property has been invested on behalf of the child by the father, although he has not been legally appointed guardian, the amount should be included in the return made by the father as a part of his (the father's) income.13

10 See Chapter 6 on agents for non-resident aliens.

11 T. D. 2090.

12 Reg. 33, Art. 17.

13 Letter from Treasury Department dated October 20, 1916; I. T. S. 1917, ¶ 248. This ruling is made apparently to prevent evasion of the law by distributing the income of the parent among his minor children.

Incompetents. Incompetent or insane persons are unable to make their own returns of net income, and the same are required to be made by the duly authorized agent, guardian or committee having charge of such incompetent or insane person.14

Absentees. Where a persons is absent from the country or is a non-resident and is unable to make the return of annual net income it may be made for him by an agent, the agent assuming the responsibility of making the return and incurring penalties provided for erroneous, false or fraudulent returns.15

Agents. Any person duly authorized and having knowledge of the income of another may file returns for his principal and pay the tax based thereon. The intent and purpose of the act is "that all gains, profits and income of a taxable class," as defined by the law, shall be charged and assessed with the corresponding tax, normal and supertax, prescribed by the law, and the tax shall be paid by the owner of such income or the proper representative having the receipt, custody, control or disposal of the same.16 Persons having the control and custody of income of non-resident aliens may, without having been appointed by the principal, be charged with the duty of making a return and paying the tax on the income passing through their hands.17

Fiduciaries. Trustees, executors, administrators and other persons acting in a fiduciary capacity are charged

14 Reg. 33, Art. 17.

15 Act of September 8, 1916, § 8 (b).

16 Act of September 8, 1916, §9 (g).

17 See Chapter 6 for duties of agents of non-residents.

with special duties under the law. These duties are fully discussed in the chapter on fiduciaries.18

Persons Dying During the Year. When a person dies during any calendar year it is the duty of the executor or administrator or person taking charge of his property to make a return for the deceased from the beginning of the year to the date of death. In this return should be reported all of the income received up to the time of death and all the allowable deductions incurred up to that time. The personal exemption may be claimed in full according to the status of the decedent and regardless of the length of time during the year in which he lived. In case the decedent dies after the close of the calendar year, but before March 1st of the following year, and has not made a return for the preceding calendar year a return should be made for the full year preceding and in addition a return from January 1 of the current year to the date of death. If during the period in which the decedent lived he was not in receipt of $1,000 of net income, if unmarried, or $2,000, if married, no return need be filed, unless he was a non-resident alien, in which case a return should be filed, whether married or single, if the amount is $1,000 or more. The fact that a person may have died before the passage of the law does not relieve his estate of liability for tax, if he lived during any part of the time after the incidence of the tax. Thus a person dying after March 1, 1913, but before October 3, 1913, the date on which the 1913 Law was passed, was held to be taxable thereunder. The effect of making the act retroactive is to apply it to him

18 See Chapter 8,