§ 1442. Withholding of tax on foreign corporations

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1954

   Aug. 16, 1954, ch. 736, 68A Stat. 358 · 68A Stat. 358

   Enacted · 26 U.S.C. § 1442

   Aug. 16, 1954, ch. 736, 68A Stat. 358

   Source evidence

   Code source credit
   Aug. 16, 1954, ch. 736, 68A Stat. 358

2. 1966

   Foreign Investors Tax Act of 1966

   Pub. L. 89–809 title I § 104(c) · 80 Stat. 1539

   Changed · 26 U.S.C. § 1442

   Pub. L. 89–809 limited the withholding of tax at the 30 percent rate to items of fixed or determinable United States source income not effectively connected with the conduct of a trade or business in the United States and authorized the granting of an exemption from the withholding requirement in the case of a foreign corporation engaged in trade or business within the United States if the Secretary or his delegate determines that the withholding imposes an undue administrative burden and that the collection of the tax will not be jeopardized by the exemption

   Source evidence

   Code amendment note
   Pub. L. 89–809 limited the withholding of tax at the 30 percent rate to items of fixed or determinable United States source income not effectively connected with the conduct of a trade or business in the United States and authorized the granting of an exemption from the withholding requirement in the case of a foreign corporation engaged in trade or business within the United States if the Secretary or his delegate determines that the withholding imposes an undue administrative burden and that the collection of the tax will not be jeopardized by the exemption.

   Enacted provision · exact public law section
   (c) Withholding of Tax on Foreign Corporations.— Section 1442 (relating to withholding of tax on foreign corporations) is 68A Stat. 358. amended to read as follows: “SEC. 1442. WITHHOLDING OF TAX ON FOREIGN CORPORATIONS. “(a) General Rule.— In the case of foreign corporations subject to taxation under this subtitle, there shall be deducted and withheld 26 USC 1–1563. at the source in the same manner and on the same items of income as is provided in section 1441 or section 1451 a tax equal to 30 percent Ante, p. 1553. thereof; except that, in the case of interest described in section 1451 (relating to tax-free covenant bonds), the deduction and withholding shall be at the rate specified therein. 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), Ante, p. 1555. 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 Post, p. 1561. may be, and the reference in section 1441(c)(5) to section 871(a)(1)(D) Ante, pp. 1553, 1547, 1555. shall be treated as referring to section 881(a)(4). “(b) Exemption.— Subject to such terms and conditions as may be provided by regulations prescribed by the Secretary or his delegate, subsection (a) shall not apply in the case of a foreign corporation engaged in trade or business within the United States if the Secretary or his delegate 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.”

3. 1971

   Revenue Act of 1971

   Pub. L. 92–178 title III § 313(e) · 85 Stat. 494

   Changed · 26 U.S.C. § 1442(a)

   Pub. L. 92–178 provided that reference in section 1441(c)(8) to section 871(a)(1)(C) shall be treated as referring to section 881(a)(3)

   Source evidence

   Code amendment note
   Subsec. (a). Pub. L. 92–178 provided that reference in section 1441(c)(8) to section 871(a)(1)(C) shall be treated as referring to section 881(a)(3).

   Enacted provision · exact public law section
   (e) Withholding on Foreign Corporations— Section 1442(a) (relating to withholding of tax on foreign corporations) is amended— (1) by striking out “and” the last time it appears, and (2) by inserting before the period at the end thereof “, and the reference in section 1441(c)(8) to section 871(a)(1)(C) shall be treated as referring to section 881(a) (3)”.

4. 1972

   Pub. L. 92–606 § 1(e)(2) · 86 Stat. 1494

   Added · 26 U.S.C. § 1442(c)

   Pub. L. 92–606 added subsec. (c)

   Source evidence

   Code amendment note
   Subsec. (c). Pub. L. 92–606 added subsec. (c).

   Enacted provision · exact public law section
   (2) Section 1442 of such Code (relating to the withholding of 80 Stat. 1557. tax on foreign corporations) is amended by adding at the end thereof the following new subsection: “(c) Exception for Guam Corporations.— For purposes of this section, the term ‘foreign corporation’ does not include a corporation “Foreign corporation.”. created or organized in Guam or under the law of Guam.”

5. 1976

   Pub. L. 94–455 title XIX § 1906(b)(13)(A) · 90 Stat. 1520

   Struck · 26 U.S.C. § 1442(b)

   Pub. L. 94–455 struck out “or his delegate” after “Secretary” in two places

   Source evidence

   Code amendment note
   Subsec. (b). Pub. L. 94–455 struck out “or his delegate” after “Secretary” in two places.

   Enacted provision · exact public law section
   (A) The Internal Revenue Code of 1954, as amended by this Act, is amended by striking out “Secretary or his delegate” each place it appears and inserting in lieu thereof “Secretary”.

6. 1984

   Tax Reform Act of 1984

   Pub. L. 98–369 § 474(r)(29)(I) · 98 Stat. 494

   1. Struck · 26 U.S.C. § 1442(a)

      Pub. L. 98–369, § 474(r)(29)(I), struck out “or section 1451” after “provided in section 1441”

   2. Struck · 26 U.S.C. § 1442(a)

      Pub. L. 98–369, § 474(r)(29)(I), struck out “; except that, in the case of interest described in section 1451 (relating to tax-free covenant bonds), the deduction and withholding shall be at the rate specified therein” after “a tax equal to 30 percent thereof”

   Source evidence

   Code amendment note
   Subsec. (a). Pub. L. 98–369, § 474(r)(29)(I), struck out “or section 1451” after “provided in section 1441” and struck out “; except that, in the case of interest described in section 1451 (relating to tax-free covenant bonds), the deduction and withholding shall be at the rate specified therein” after “a tax equal to 30 percent thereof”.

   Enacted provision · exact public law section
   (I) Subsection (a) of section 1442 is amended— (i) by striking out “or section 1451”, and (ii) by striking out except that, in the case of interest described in section 1451 (relating to tax-free covenant bonds), the deduction and withholding shall be at the rate specified therein”.

7. 1984

   Tax Reform Act of 1984

   Pub. L. 98–369 § 127(e)(2) · 98 Stat. 494

   Struck and inserted · 26 U.S.C. § 1442(a)

   Pub. L. 98–369, § 127(e)(2), struck out “and” after “section 881(a)(4),” and inserted “, and the references in section 1449(c)(9) to sections 871(h)(2) and 871(h)(3) shall be treated as referring to sections 881(c)(2) and 881(c)(3)”

   Target inherited from the preceding amendment note.

   Source evidence

   Code amendment note
   Pub. L. 98–369, § 127(e)(2), struck out “and” after “section 881(a)(4),” and inserted “, and the references in section 1449(c)(9) to sections 871(h)(2) and 871(h)(3) shall be treated as referring to sections 881(c)(2) and 881(c)(3)”.

   Enacted provision · exact public law section
   (2) Foreign corporations.— The last sentence of section 26 USC 1442. 1442(a) is amended— (A) by striking out “and” after “section 881(a)(4),” and (B) by inserting before the period at the end thereof the following: “, and the references in section 1449(c)(9) to sections 871(h)(2) and 871(h)(3) shall be treated as referring to sections 881(c)(2) and 881(c)(3)”.

8. 1984

   Tax Reform Act of 1984

   Pub. L. 98–369 § 130(b) · 98 Stat. 494

   Substituted · 26 U.S.C. § 1442(c)

   Pub. L. 98–369, § 130(b), substituted provision relating to exception for certain Guam and Virgin Islands corporations for provision relating to exception for Guam corporations

   Source evidence

   Code amendment note
   Subsec. (c). Pub. L. 98–369, § 130(b), substituted provision relating to exception for certain Guam and Virgin Islands corporations for provision relating to exception for Guam corporations.

   Enacted provision · exact public law section
   (b) Withholding of Tax.— Subsection (c) of section 1442 (relating 26 USC 1442. to exception for Guam corporations) is amended to read as follows: “(c) Exception for Certain Guam and Virgin Islands Corporations.— “(1) In general.— For purposes of this section, the term ‘foreign corporation’ does not include a corporation created or organized in Guam or the Virgin Islands or under the law of Guam or the Virgin Islands if the requirements of subparagraphs (A) and (B) of section 881(b)(1) are met with respect to Ante, p. 660. such corporation. “(2) Paragraph (i) not to apply to tax imposed in guam.— For purposes of applying this subsection with respect to income tax liability incurred to Guam— “(A) paragraph (1) shall not apply, and “(B) for purposes of this section, the term ‘foreign corporation’ does not include a corporation created or organized in Guam or under the law of Guam. “(3) Cross reference.— “For tax imposed in the Virgin Islands, see sections 934 and 934A.”

9. 1986

   Tax Reform Act of 1986

   Pub. L. 99–514 § 1810(d)(3)(E) · 100 Stat. 2085

   1. Substituted · 26 U.S.C. § 1442(a)

      Pub. L. 99–514, § 1810(d)(3)(E), substituted “871(h)” for “871(h)(2)”

   2. Substituted · 26 U.S.C. § 1442(a)

      Pub. L. 99–514, § 1810(d)(3)(E), substituted “881(c)” for “881(c)(2)”

   3. Substituted · 26 U.S.C. § 1442(a)

      Pub. L. 99–514, § 1810(d)(3)(E), substituted “1441(c)(9)” for “1449(c)(9)”

   Source evidence

   Code amendment note
   Subsec. (a). Pub. L. 99–514, § 1810(d)(3)(E), substituted “871(h)” for “871(h)(2)”, “881(c)” for “881(c)(2)”, and “1441(c)(9)” for “1449(c)(9)”.

   Enacted provision · exact public law section
   (E) Subsection (a) of section 1442 is amended— (i) by striking out “sections 871(h)(2)” and inserting in lieu thereof “sections 871(h)”, (ii) by striking out “sections 881(c)(2)” and inserting in lieu thereof “sections 881(c)”, and (iii) by striking out “section 1449(c)(9)” and inserting in lieu thereof “section 1441(c)(9)”.

10. 1986

    Tax Reform Act of 1986

    Pub. L. 99–514 § 1273(b)(2)(B) · 100 Stat. 2085

    1. Amended · 26 U.S.C. § 1442(c)

       Pub. L. 99–514, § 1273(b)(2)(B), amended subsec. (c) generally

    2. Substituted · 26 U.S.C. § 1442(c)

       Pub. L. 99–514, § 1273(b)(2)(B), substituting reference to “certain possessions corporations” for reference to “certain Guam and Virgin Islands corporations” in heading, and in text extending “foreign corporation” exception so as to not include corporation created or organized in Guam, American Samoa, Northern Mariana Islands, or the Virgin Islands

    3. Struck · 26 U.S.C. § 1442(c)

       Pub. L. 99–514, § 1273(b)(2)(B), striking out par. (2) which declared that par. (1) not apply to tax imposed in Guam, and par. (3) which referred to sections 934 and 943a for tax imposed in Virgin Islands

    Source evidence

    Code amendment note
    Subsec. (c). Pub. L. 99–514, § 1273(b)(2)(B), amended subsec. (c) generally, substituting reference to “certain possessions corporations” for reference to “certain Guam and Virgin Islands corporations” in heading, and in text extending “foreign corporation” exception so as to not include corporation created or organized in Guam, American Samoa, Northern Mariana Islands, or the Virgin Islands, and striking out par. (2) which declared that par. (1) not apply to tax imposed in Guam, and par. (3) which referred to sections 934 and 943a for tax imposed in Virgin Islands.

    Enacted provision · exact public law section
    (B) Subsection (c) of section 1442 is amended to read as follows: “(c) Exception for Certain Possessions Corporations.— 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.”

11. 1988

    Technical and Miscellaneous Revenue Act of 1988

    Pub. L. 100–647 title I § 1012(g)(7) · 102 Stat. 3342

    Struck and inserted · 26 U.S.C. § 1442(a)

    Pub. L. 100–647 struck out “and” after “to section 881(a)(3),” and inserted before period at end “, and the reference in section 1441(c)(10) to section 871(i)(2) shall be treated as referring to section 881(d)”

    Source evidence

    Code amendment note
    Subsec. (a). Pub. L. 100–647 struck out “and” after “to section 881(a)(3),” and inserted before period at end “, and the reference in section 1441(c)(10) to section 871(i)(2) shall be treated as referring to section 881(d)”.

    Enacted provision · exact public law section
    (7) Subsection (a) of section 1442 of the 1986 Code is amended— (A) by striking out “and the references in” and inserting in lieu thereof “the references in”, and (B) by inserting before the period at the end thereof the following: “, and the reference in section 1441(c)(10) to section 871(i)(2) shall be treated as referring to section 881(d)”.

12. 1993

    Revenue Reconciliation Act of 1993

    Pub. L. 103–66 title XIII § 13237(c)(5) · 107 Stat. 312

    1. Substituted · 26 U.S.C. § 1442(a)

       Pub. L. 103–66 substituted “871(h)(3) or (4)” for “871(h)(3)”

    2. Substituted · 26 U.S.C. § 1442(a)

       Pub. L. 103–66 substituted “881(c)(3) or (4)” for “881(c)(3)”

    Source evidence

    Code amendment note
    Subsec. (a). Pub. L. 103–66 substituted “871(h)(3) or (4)” for “871(h)(3)” and “881(c)(3) or (4)” for “881(c)(3)”.

    Enacted provision · exact public law section
    (5) Subsection (a) of section 1442 is amended— (A) by striking “871(h)(3)” and inserting “871(h)(3) or (4)”, and (B) by striking “881(c)(3)” and inserting “881(c)(3) or (4)”.

13. 2004

    Pub. L. 108–357 § 411(a)(3)(B) · 118 Stat. 1418

    1. Substituted · 26 U.S.C. § 1442(a)

       Pub. L. 108–357, § 411(a)(3)(B), substituted “the reference in section 1441(c)(10)” for “and the reference in section 1441(c)(10)”

    2. Inserted · 26 U.S.C. § 1442(a)

       Pub. L. 108–357, § 411(a)(3)(B), inserted before period at end “, 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)”

    Source evidence

    Code amendment note
    Subsec. (a). Pub. L. 108–357, § 411(a)(3)(B), substituted “the reference in section 1441(c)(10)” for “and the reference in section 1441(c)(10)” and inserted before period at end “, 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)”.

    Enacted provision · exact public law section
    (B) Section 1442(a) (relating to withholding of tax on foreign corporations) is amended— (i) by striking “and the reference in section 1441(c)(10)” and inserting “the reference in section 1441(c)(10)”, and (ii) by inserting before the period at the end the following: “, 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)”.

    Effective date note
    Amendment by section 411(a)(3)(B) of Pub. L. 108–357 applicable to dividends with respect to taxable years of regulated investment companies beginning after Dec. 31, 2004, see section 411(d)(1) of Pub. L. 108–357, set out as a note under section 871 of this title. Amendment by section 420(b) of Pub. L. 108–357 applicable to dividends paid after Oct. 22, 2004, see section 420(d) of Pub. L. 108–357, set out as a note under section 881 of this title.

14. 2004

    Pub. L. 108–357 § 420(b) · 118 Stat. 1418

    1. Amended · 26 U.S.C. § 1442(c)

       Pub. L. 108–357, § 420(b), designated existing provisions as par. (1)

    2. Inserted · 26 U.S.C. § 1442(c)

       Pub. L. 108–357, § 420(b), inserted heading

    3. Added · 26 U.S.C. § 1442(c)

       Pub. L. 108–357, § 420(b), added par. (2)

    Source evidence

    Code amendment note
    Subsec. (c). Pub. L. 108–357, § 420(b), designated existing provisions as par. (1), inserted heading, and added par. (2).

    Enacted provision · exact public law section
    (b) Withholding.— Subsection (c) of section 1442 (relating to withholding of tax on foreign corporations) is amended— (1) by striking “For purposes” and inserting the following: “(1) Guam, american samoa, the northern mariana islands, and the virgin islands.— For purposes” , and (2) by adding at the end the following new paragraph: “(2) Commonwealth of puerto rico.— “(A) In general.— If dividends are received during a taxable year by a corporation— “(i) created or organized in, or under the law of, the Commonwealth of Puerto Rico, and “(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’. “(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.” .

    Effective date note
    Amendment by section 411(a)(3)(B) of Pub. L. 108–357 applicable to dividends with respect to taxable years of regulated investment companies beginning after Dec. 31, 2004, see section 411(d)(1) of Pub. L. 108–357, set out as a note under section 871 of this title. Amendment by section 420(b) of Pub. L. 108–357 applicable to dividends paid after Oct. 22, 2004, see section 420(d) of Pub. L. 108–357, set out as a note under section 881 of this title.

22 of 23 references resolved to an enrolled provision · 1 partial