INCOME TAX-NONRESIDENT ALIENS. Nonresident aliens corporate or individual-not carrying on any business, trade or profession in the United States are not subject to tax under the act of October 3, 1913 (38 Stat. 166), on income derived from (a) stocks or bonds of domestic corporations doing a domestic business, or (b) from obligations secured by mortgages on tangible property within the United States, whether such obligations be held by the owners or by their collecting agents here. Opinions of October 23, 1913 (30 Op. 230), July 15, 1914 (30 Op. 273), and February 19, 1915, adhered to. DEPARTMENT OF JUSTICE, SIR: I have the honor to acknowledge receipt of your two letters of July 21, 1915, wherein you ask my opinion as to whether nonresident aliens-corporate or individual—not carrying on any business, trade, or profession in the United States are subject to tax under the act of October 3, 1913 (38 Stat. 166 et seq.), on income derived from (a) stocks or bonds of domestic corporations doing a domestic business, or (b) from obligations secured by mortgages on tangible property within the United States, whether such obligations be held by the owners or by their collecting agents here. On October 23, 1913, my predecessor rendered an opinion that this act did not tax such income from obligations whether secured or unsecured (30 Op. 230). On July 15, 1914 (30 Op. 273), he rendered a second opinion that it did not tax such income from stocks of domestic corporations. And on February 19, 1915, I rendered an opinion that the fact that bonds of domestic corporations were held here by such collecting agents did not distinguish them under the above rule. You, in effect, ask a reconsideration of these opinions. As expressed to you, they were not elaborated; but no subject has received more painstaking consideration at the hands of this Department. Nevertheless because of your earnest representations it has been again most carefully reviewed. The language to be interpreted is found in the last clause of subdivision 1 of Paragraph A of Section II (38 Stat. 166), and reads: "And a like tax shall be assessed, levied, collected, and paid annually upon the entire net income from all property owned and of every business, trade, or profession carried on in the United States by persons residing elsewhere." I am compelled to adhere to the opinions heretofore expressed, and to answer your present question in the negative. My conclusion is confirmed by a consideration of the history both of this act, and of the earlier related legislation. HISTORY OF THIS ACT. On April 7, 1913, it was introduced by Congressman Hull as H. R. 3321. On May 9, 1913, it passed the House, having carried the above language from the beginning save that the word "collected" was later inserted after the report of the Senate Finance Committee of July 11, 1913. This paragraph stood otherwise unchanged until September 6, 1913, when Senator Williams, in Senate Committee of the Whole, offered this amendment to immediately follow the paragraph: "Provided, That the tax herein imposed upon individuals with respect to their incomes shall likewise be levied upon all interests as such, which may be due or payable to any nonresident alien, subject to the exemptions and deductions provided in this section, which shall be made at the source in his behalf." (Vol. 50, Cong. Rec., 63d Cong., 1st sess., Sept. 6, 1913, pp. 4378, 4379.) The day before, and the very day it was offered, the amendment was the subject of two letters from Assistant Secretary of the Treasury Hamlin to the author of the bill. His letters disclose that Mr. Hull was himself the author of the amendment; that its purpose was to reach income from foreign-held intangibles. The first suggests a corresponding amendment to cover such income of foreign corporations, and the writer in both suggests grave doubt as to the constitutional power of Congress to deal with "this perplexing question." On September 9 the bill passed the Senate carrying that amendment. The House refused concurrence. Later joint conference committee recommended striking out that amendment. Its report as to Section II stated that "no material change is made in the fundamental features of the House provision." (Vol. 50, part 6, Cong. Rec., 63d Cong., 1st sess., p. 5229.) The recommendation was adopted, and the amendment rejected. THE EARLIER LEGISLATION. The acts of 1861 (sec. 49, 12 Stat. 309) and 1862 (sec. 90, 12 Stat. 473) each carried this language: "Property, securities or stocks owned in the United States by any citizen residing abroad." August 2, 1861, the chairman of the House managers of the conference committee said: "Where persons reside abroad who hold property in this country on which they derive an income, which they spend abroad, we have laid an income tax of five per cent. We thought it right that they should bear more of the burden of the country than those who spend their income in the United States." (Cong. Globe, 37th Cong., 1st sess., p. 415.) The act of 1864 (sec. 116, 13 Stat. 281), as amended by the act of March 3, 1865 (13 Stat. 479), carrying this language, "incomes of every person residing in the United States, or of any citizen of the United States residing abroad," with a provision for deduction by corporations of the tax on all interest paid by them (which was held to be but a collection scheme not extending the class subject to tax) was held in Railroad Co. v. Jackson, 7 Wall. 262, not to be aimed at nonresident aliens. It was amended July 13, 1866 (14 Stat. 138), to include income from "every business, trade, or profession carried on in the United States" by nonresident aliens. Thus we see that of the language here involved, the phrase "business, trade, or profession came from the act of 1866 while the phrase "property owned in " came from the act of 1861. Doubtless because of the Jackson case, and on March 10, 1866 (14 Stat. 4, 5), Congress, in connection with the words "dividends payable" and "interests on coupons, dividends or profits payable" found * * * * * ** in the act of 1864 (13 Stat. 233), defined the payees as "including nonresidents whether citizens or aliens "; and by the amendments of July 13, 1866 (14 Stat. 138, 139), incorporated the language of the definition in each proper section. Of this language the court said, in the Jackson case (269): "It is not important, however, to pursue the argument, as Congress has since in express terms by the acts of March 10 and July 13, 1866, imposed a tax on alien nonresident bondholders." THE PRESENT QUESTION. Congress doubtless has the power to tax such incomes from stocks so held (Corry v. Baltimore, 196 U. S. 474; Jellenik v. Huron C. M. Co., 177 U. S. 1; Covington v. Bank, 198 U. S. 111; Pullman Car Co. v. Pennsylvania, 141 U. S. 22; Buck v. Beech, 206 U. S. 392; Miller v. United States, 11 Wall. 297; Matter of Bronson, 150 N. Y. 4, 5); and it may have a like power as to all securities (United States v. Bennett, 232 U. S. 299; New Orleans v. Stemple, 175 U. S. 309; Bristol v. Washington County, 177 U. S. 133; Assessors v. Bank, 191 U. S. 388; Metropolitan Ins. Co. v. New Orleans, 205 U. S. 395; L. L. & G. Ins. Co. v. New Orleans Assessors, 221 U. S. 346), though the latter may be doubtful (Wheeler v. Sohmer, 233 U. S. 434; Orleans Parish v. Insurance Co., 216 U. S. 523, and Matter of Bronson, 150 N. Y. 8). But whatever be the power of Congress in this regard it has not by the present act (1913) undertaken to exercise any such power. A purpose to tax must be declared in clear and unambiguous language. Eidman v. Martinez, 184 U. S. 578; United States v. Ishmm, 17 Wall. 504; United States v. Wigglesworth 28 Storey, 373. And in the absence of legislative declaration to the contrary the place of taxation of intangibles is at the domicile or residence of their owner. Hawley v. Malden, 232 U. S. 11, 12; Covington v. Bank, supra. While these rules do not demand a declaration in direct or self-interpreting words, they do require that the lan guage, when read in the light of the controlling principles of statutory construction, shall amount to a clear and unambiguous declaration of a purpose to lay the particular tax. It can not be fairly said that the language here used is so direct as to be self-interpreting. At most it might be read as for the tax. To resolve whatever doubt exists. resort may be had to the history of the act and the prior legislation on the subject. United States v. Bowen, 100 U. S. 513; Myer v. Car Co., 102 U. S. 11; Deffeback v. Hacke, 115 U. S. 402; Bate Refrigerating Co. v. Sulzberger, 157 U. S. 36, 39; United States v. Burr, 159 U. S. 85, 86. 1. Congress had never before so acted save by express positive language. * * * The acts of 1861 and 1862, supra, were limited to incomes of persons (citizens or aliens) residing in the United States and incomes from "property, securities or stocks. owned in the United States" by its citizens residing abroad. The act of 1864, supra, puts the citizen residing abroad on the same plane with persons residing in the United States. Neither it nor the amendment of 1865 enlarges or changes the class of persons to be taxed. Congress first sought to reach nonresident aliens by the acts of March 10 and July 13, 1866, supra. And prior to 1870 the Supreme Court of the United States in the Jackson case had pointed out what of the language already used by Congress did not operate to reach nonresident aliens, and what of its language on the other hand expressly included them. None of the latter language was used in this bill. 2. While adopting in part the language "property, securities or stocks owned," etc., from the act of 1861, Congress in the present act omitted the words "securities or stocks." Of course the word "property" is broad enough to include both tangibles and intangibles. Nevertheless the insertion of the words "securities or stocks" in the original act of 1861 indicates an intention that the word "property" should not include "securities or stocks"; and the adoption of the word "property " only in the present |