to the withholding agent. This letter will also state the portion of the total tax assessed against the withholding agent on the basis of the annual return on Form 1013 (see article 143-8) to be abated by reason of the exemption certificates covering the claims allowed. A copy of the letter to the withholding agent will be forwarded to the collector of internal revenue as the basis for the acceptance of an amount of tax less than that assessed. No portion of the tax withheld from nonresident aliens should be released on the basis of the exemption certificates, Form 1002, until such letter has been received by the withholding agent. The tax assessed on the basis of the return on Form 1013 less the amount of tax to be abated as shown by the letter to the withholding agent must be paid to the collector on or before June 15. If Forms 1002 are received after the tax has been paid, the tax shown to have been overpaid shall be credited or refunded as provided in sections 143 (f) and 322.

The exemption certificate, Form 1002, properly executed, should be filed with the withholding agent at any time after the close of the calendar year, but not later than May 1 of the succeeding year. Notwithstanding the fact that Form 1002 is filed, ownership certificates must be filed as provided in articles 143-5 and 143–7.

As to allowance of personal exemption to nonresident alien employees, see article 214-2.

ART. 143-5. Ownership certificates for bond interest.-In accordance with the provisions of section 147 (b), citizens and resident individuals and fiduciaries, resident partnerships and nonresident partnerships all of the members of which are citizens or residents, owning bonds, mortgages, or deeds of trust, or other similar obligations issued by a domestic corporation, a resident foreign corporation, or a nonresident foreign corporation having a fiscal agent or a paying agent in the United States, when presenting interest coupons for payment shall file ownership certificates for each issue of such obligations regardless of the amount of the coupons.

In the case of interest payments on overdue coupon bonds, the interest coupons of which have been exhausted, ownership certificates are required to be filed when collecting the interest in the same manner as if interest coupons were presented for collection.

In all cases where the owner of bonds, mortgages, or deeds of trust, or other similar obligations of a corporation is a nonresident alien (individual or fiduciary), nonresident partnership composed in whole or in part of nonresident aliens, nonresident foreign corporation, or where the owner is unknown, an ownership certificate for each issue of such obligations shall be filed when interest coupons for any amount are presented for payment. The ownership certificate is required whether or not the obligation contains a tax-free covenant.

However, ownership certificates need not be filed by a nonresident alien, a partnership composed in whole of nonresident aliens, or a nonresident foreign corporation in connection with interest payments on such bonds, mortgages, or deeds of trust or other similar obligations of a domestic or resident foreign corporation qualifying under section 119 (a) (1) (B), or of a nonresident foreign corporation.

The ownership certificate shall show the name and address of the debtor corporation, the name and address of the owner of the obligations, a description of the obligations, the amount of interest and its due date, the rate at which tax is to be withheld, and the date upon which the interest coupons were presented for payment.

Ownership certificates need not be filed in the case of interest payments on obligations of a State, Territory, or any political subdivision thereof, or the District of Columbia; or obligations of a corporation organized under Act of Congress, if such corporation is an instrumentality of the United States; or the obligations of the United States or its possessions. (See section 22 (b) (4).) Ownership certificates are not required to be filed in connection with interest payments on bonds, mortgages, or deeds of trust, or other similar obligations issued by an individual or a partnership. Ownership certificates are not required where the owner is a domestic corporation, a resident foreign corporation, or a foreign government.

When interest coupons detached from corporate bonds are received unaccompanied by ownership certificates, unless the owner of the bonds is known to the first bank to which the coupons are presented for payment, and the bank is satisfied that the owner is a person who is not required to file an ownership certificate, the bank shall require of the payee a statement showing the name and address of the person from whom the coupons were received by the payee, and alleging that the owner of the bonds is unknown to the payee. Such statement shall be forwarded to the Commissioner with the monthly return on Form 1012. The bank shall also require the payee to prepare a certificate on Form 1001, crossing out "owner " and inserting payee" and entering the amount of the interest on line 3, and shall stamp or write across the face of the certificate "Statement furnished," adding the name of the bank.

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Ownership certificates are required in connection with interest payments on registered bonds as in the case of coupon bonds, except that if ownership certificates are not furnished by the owner of such bonds, ownership certificates must be prepared by the withholding agent.

ART. 143-6. Form of certificate for citizens or residents.-For the purpose of article 143-5, Form 1000 shall be used in preparing owner

ship certificates of citizens or residents of the United States (individual or fiduciary), resident partnerships, and nonresident partnerships all of the members of which are citizens or residents. If the obligations are issued by a nonresident foreign corporation having a fiscal or paying agent in the United States, Form 1000 should be modified to show the name and address of the fiscal agent or the paying agent in addition to the name and address of the debtor corporation.

ART. 143-7. Form of certificate for nonresident aliens, nonresident foreign corporations, and unknown owners.-For the purpose of article 143–5, Form 1001 shall be used in preparing ownership certificates (a) of nonresident aliens (individual or fiduciary), (b) of nonresident partnerships composed in whole or in part of nonresident aliens, (c) of nonresident foreign corporations, and (d) where the owner is unknown.

ART. 143-8. Return and payment of tax withheld. Every withholding agent shall make on or before March 15 an annual return on Form 1013 of the tax withheld from interest on corporate bonds or other obligations. This return should be filed with the collector for the district in which the withholding agent is located. The withholding agent shall also make a monthly return on Form 1012 on or before the 20th day of the month following that for which the return is made. The ownership certificates, Forms 1000 and 1001, must be forwarded to the Commissioner with the monthly return. Such of the forms as report interest from which the tax is to be withheld should be listed on the monthly return. While the forms reporting interest from which no tax is to be withheld need not be listed on the return, the number of such forms submitted should be entered in the space provided. If Form 1000 is modified to show the name and address of a fiscal or paying agent in the United States (see article 143–6), Forms 1012 and 1013 should be likewise modified.

Every person required to deduct and withhold any tax from income other than such bond interest shall make an annual return thereof to the collector on or before March 15 on Form 1042, showing the amount of tax required to be withheld for each nonresident alien (individual or fiduciary), nonresident partnership composed in whole or in part of nonresident aliens, or nonresident foreign corporation to which income other than bond interest was paid during the previous taxable year. Form 1042 should be filed with the collector for the district in which the withholding agent is located. In every case of both classes the tax withheld must be paid on or before June 15 of each year to the collector. For penalties and additions to the tax attaching upon failure to make such returns or such payment, see sections 145 and 291.

If a debtor corporation has designated a bank to act for it as withholding agent, and the bank has not collected any tax from the bondholders nor received any funds from the debtor corporation to pay the tax which the debtor corporation assumed in connection with its tax-free covenant bonds, the bank can not be held liable for the tax merely by reason of its appointment as withholding agent. If a duly authorized withholding agent has become insolvent or for any other reason fails to make payment to the collector of internal revenue of money deposited with it by the debtor corporation to pay taxes, or money withheld from bondholders, the debtor corporation is not discharged of its liability under section 143 (a) (1), since the withholding agent is merely the agent of the debtor corporation.

ART. 143-9. Ownership certificates in the case of fiduciaries and joint owners. If fiduciaries have the control and custody of more than one estate or trust, and such estates and trusts have as assets bonds of corporations and other securities, a certificate of ownership shall be executed for each estate or trust, regardless of the fact that the bonds are of the same issue. If bonds are owned jointly by two or more persons, a separate ownership certificate must be executed in behalf of each of the owners.

ART. 143-10. Return of income from which tax was withheld.-The entire amount of the income from which the tax was withheld shall be included in gross income without deduction for such payment of the tax. But any tax so withheld shall be credited against the total tax as computed in the taxpayer's return. If the tax is paid by the recipient of the income or by the withholding agent it shall not be re-collected from the other, regardless of the original liability therefor, and in such event no penalty will be asserted against either person for failure to return or pay the tax where no fraud or purpose to evade payment is involved.

ART. 143–11. Release and refund of excess tax withheld.-The portion of the tax withheld from interest on bonds, mortgages, or deeds of trust, or similar obligations of corporations paid on or after January 1, 1934, and before 11.40 a. m., eastern standard time, May 10, 1934, under the Revenue Act of 1932 which is in excess of the tax required to be withheld under the Revenue Act of 1934 shall be retained by the withholding agent and reported on annual withholding return, Form 1013, for 1934, which shall be filed on or before March 15, 1935, and the tax shall be paid over to the appropriate collector of internal revenue on or before June 15, 1935, except in those cases where by reason of the approval of exemption certificates, Form 1002, filed by the owners, the corporation is authorized to release the tax to the owners.

The portion of the tax withheld on other classes of income paid on or after January 1, 1934, and before 11.40 a. m., eastern standard time, May 10, 1934, under the Revenue Act of 1932, which is in excess of the tax required to be withheld under the Revenue Act of 1934, shall be retained by the withholding agent and reported on the annual withholding return, Form 1042, which shall be filed on or before March 15, 1935, and the tax shall be paid to the collector of internal revenue on or before June 15, 1935, except in those cases where an alien employee files with his employer a properly executed claim on Form 1115. Upon receipt of Form 1115 for 1934 by an employer, or if such a form has already been received, the employer may release and pay over to the employee or his proper representative the excess tax withheld from compensation for labor or services performed in the United States.

In those cases where the payee from whom tax has been withheld is not eligible to file an exemption certificate on Form 1002, or a claim on Form 1115, refund of any excess tax withheld shall be made only by the Bureau of Internal Revenue. Such payee may file a claim for refund on Form 843 accompanied by an individual income tax return on Form 1040 B.

SEC. 144. PAYMENT OF CORPORATION INCOME TAX AT
SOURCE.

In the case of foreign corporations subject to taxation under this title not engaged in trade or business within the United States and not having any office or place of business therein, there shall be deducted and withheld at the source in the same manner and upon the same items of income as is provided in section 143 a tax equal to 134 per centum, and such tax shall be returned and paid in the same manner and subject to the same conditions as provided in that section: Provided, That in the case of interest described in subsection (a) of that section (relating to tax-free covenant bonds) the deduction and withholding shall be at the rate specified in such subsection.

ART. 144-1. Withholding in the case of nonresident foreign corporations. In general, with respect to payments to nonresident foreign corporations (see article 801-8) withholding is required of a tax of 2 per cent in the case of interest representing income from sources within the United States paid upon corporate bonds or other obligations containing a tax-free covenant, issued before January 1, 1934, except that such withholding is required at the rate of 1334 per cent if the liability assumed by the obligor does not exceed 2 per cent of the interest. Withholding of a tax of 1334 per cent is also required in the case of payments of other fixed or determinable annual or periodical income from sources within the United States to nonresident foreign corporations, except dividends paid by a corporation subject to taxation under Title I other than dividends dis