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26 U.S.C. § 1446 — Withholding of tax on foreign partners’ share of effectively connected income

Federal law — U.S. Code and appendices · legal_authorities

26 U.S.C. § 1446 — Withholding of tax on foreign partners’ share of effectively connected income

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Source file: Laws/federal/codes/united-states-code/title-26/section-1446-withholding-of-tax-on-foreign-partners-share-of-effectively-connected-in--79dbb023e4.md
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Source location: Title 26, Chapter 3, § 1446; chapter-003-withholding-of-tax-on-nonresident-aliens-and-foreign-corporations.md

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**(a) General rule** If— (1) a partnership has effectively connected taxable income for any taxable year, and (2) any portion of such income is allocable under section 704 to a foreign partner, such partnership shall pay a withholding tax under this section at such time and in such manner as the Secretary shall by regulations prescribe. **(b) Amount of withholding tax** (1) **In general** — The amount of the withholding tax payable by any partnership under subsection (a) shall be equal to the applicable percentage of the effectively connected taxable income of the partnership which is allocable under section 704 to foreign partners. (2) **Applicable percentage** — For purposes of paragraph (1), the term “applicable percentage” means— (A) the highest rate of tax specified in section 1 in the case of the portion of the effectively connected taxable income which is allocable under section 704 to foreign partners who are not corporations, and (B) the highest rate of tax specified in section 11(b) in the case of the portion of the effectively connected taxable income which is allocable under section 704 to foreign partners which are corporations. **(c) Effectively connected taxable income** For purposes of this section, the term “effectively connected taxable income” means the taxable income of the partnership which is effectively connected (or treated as effectively connected) with the conduct of a trade or business in the United States computed with the following adjustments: (1) Paragraph (1) of section 703(a) shall not apply. (2) The partnership shall be allowed a deduction for depletion with respect to oil and gas wells but the amount of such deduction shall be determined without regard to sections 613 and 613A. (3) There shall not be taken into account any item of income, gain, loss, or deduction to the extent allocable under section 704 to any partner who is not a foreign partner. **(d) Treatment of foreign partners** (1) **Allowance of credit** — Each foreign partner of a partnership shall be allowed a credit under section 33 for such partner’s share of the withholding tax paid by the partnership under this section. Such credit shall be allowed for the partner’s taxable year in which (or with which) the partnership taxable year (for which such tax was paid) ends. (2) **Credit treated as distributed to partner** — Except as provided in regulations, a foreign partner’s share of any withholding tax paid by the partnership under this section shall be treated as distributed to such partner by such partnership on the earlier of— (A) the day on which such tax was paid by the partnership, or (B) the last day of the partnership’s taxable year for which such tax was paid. **(e) Foreign partner** For purposes of this section, the term “foreign partner” means any partner who is not a United States person. **(f) Special rules for withholding on dispositions of partnership interests** (1) **In general** — Except as provided in this subsection, if any portion of the gain (if any) on any disposition of an interest in a partnership would be treated under section 864(c)(8) as effectively connected with the conduct of a trade or business within the United States, the transferee shall be required to deduct and withhold a tax equal to 10 percent of the amount realized on the disposition. (2) **Exception if nonforeign affidavit furnished** (A) *In general* — No person shall be required to deduct and withhold any amount under paragraph (1) with respect to any disposition if the transferor furnishes to the transferee an affidavit by the transferor stating, under penalty of perjury, the transferor’s United States taxpayer identification number and that the transferor is not a foreign person. (B) *False affidavit* — Subparagraph (A) shall not apply to any disposition if— (i) the transferee has actual knowledge that the affidavit is false, or the transferee receives a notice (as described in section 1445(d)) from a transferor’s agent or transferee’s agent that such affidavit or statement is false, or (ii) the Secretary by regulations requires the transferee to furnish a copy of such affidavit or statement to the Secretary and the transferee fails to furnish a copy of such affidavit or statement to the Secretary at such time and in such manner as required by such regulations. (C) *Rules for agents* — The rules of section 1445(d) shall apply to a transferor’s agent or transferee’s agent with respect to any affidavit described in subparagraph (A) in the same manner as such rules apply with respect to the disposition of a United States real property interest under such section. (3) **Authority of Secretary to prescribe reduced amount** — At the request of the transferor or transferee, the Secretary may prescribe a reduced amount to be withheld under this section if the Secretary determines that to substitute such reduced amount will not jeopardize the collection of the tax imposed under this title with respect to gain treated under section 864(c)(8) as effectively connected with the conduct of a trade or business with in the United States. (4) **Partnership to withhold amounts not withheld by the transferee** — If a transferee fails to withhold any amount required to be withheld under paragraph (1), the partnership shall be required to deduct and withhold from distributions to the transferee a tax in an amount equal to the amount the transferee failed to withhold (plus interest under this title on such amount). (5) **Definitions** — Any term used in this subsection which is also used under section 1445 shall have the same meaning as when used in such section. (6) **Regulations** — The Secretary shall prescribe such regulations or other guidance as may be necessary to carry out the purposes of this subsection, including regulations providing for exceptions from the provisions of this subsection. **(g) Regulations** The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this section, including— (1) regulations providing for the application of this section in the case of publicly traded partnerships, and (2) regulations providing— (A) that, for purposes of section 6655, the withholding tax imposed under this section shall be treated as a tax imposed by section 11 and any partnership required to pay such tax shall be treated as a corporation, and (B) appropriate adjustments in applying section 6655 with respect to such withholding tax.

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Federal law — U.S. Code and appendices · legal_authorities

26 U.S.C. § 1 — Tax imposed

**(a) Married individuals filing joint returns and surviving spouses** There is hereby imposed on the taxable income of— (1) every married individual (as defined in section 7703) who makes a single return jointly with his spouse under section 6013, and (2) every surviving spouse (as defined in section 2(a)), a tax determined in accordance with the following table: If taxable income is:The tax is: Not over $36,90015% of taxable income. Over $36,900 but not over $89,150$5,535, plus 28% of the excess over $36,900. Over $89,150 but not over $140,000$20,165, plus 31% of the excess over $89,150. Over $140,000 but not over $250,000$35,928.50, plus 36% of the excess over $140,000. Over $250,000$75,528.50, plus 39.6% of the excess over $250,000. **(b) Heads of households** There is hereby imposed on the taxable income of every head of a household (as defined in section 2(b)) a tax determined in accordance with the following table: If taxable income is:The tax is: Not over $29,60015% of taxable income. Over $29,600 but not over $76,400$4,440, plus 28% of the excess over $29,600. Over $76,400 but not over $127,500$17,544, plus 31% of the excess over $76,400. Over $127,500 but not over $250,000$33,385, plus 36% of the excess over $127,500. Over $250,000$77,485, plus 39.6% of the excess over $250,000. **(c) Unmarried individuals (other than surviving spouses and heads of households)** There is hereby imposed on the taxable income of every individual (other than a surviving spouse as defined in section 2(a) or the head of a household as defined in section 2(b)) who is not a married individual (as defined in section 7703) a tax determined in accordance with the following table: If taxable income is:The tax is: Not over $22,10015% of taxable income. Over $22,100 but not over $53,50

Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 1

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Federal law — U.S. Code and appendices · legal_authorities

26 U.S.C. § 11 — Tax imposed

**(a) Corporations in general** A tax is hereby imposed for each taxable year on the taxable income of every corporation. **(b) Amount of tax** The amount of the tax imposed by subsection (a) shall be 21 percent of taxable income. **(c) Exceptions** Subsection (a) shall not apply to a corporation subject to a tax imposed by— (1) section 594 (relating to mutual savings banks conducting life insurance business), (2) subchapter L (sec. 801 and following, relating to insurance companies), or (3) subchapter M (sec. 851 and following, relating to regulated investment companies and real estate investment trusts). **(d) Foreign corporations** In the case of a foreign corporation, the taxes imposed by subsection (a) and section 55 shall apply only as provided by section 882.

Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 11

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Federal law — U.S. Code and appendices · legal_authorities

26 U.S.C. § 6401 — Amounts treated as overpayments

**(a) Assessment and collection after limitation period.** The term “overpayment” includes that part of the amount of the payment of any internal revenue tax which is assessed or collected after the expiration of the period of limitation properly applicable thereto. **(b) Excessive credits** (1) **In general** — If the amount allowable as credits under subpart C of part IV of subchapter A of chapter 1 (relating to refundable credits) exceeds the tax imposed by subtitle A (reduced by the credits allowable under subparts A, B, D, and G of such part IV), the amount of such excess shall be considered an overpayment. (2) **Special rule for credit under section 33** — For purposes of paragraph (1), any credit allowed under section 33 (relating to withholding of tax on nonresident aliens and on foreign corporations) for any taxable year shall be treated as a credit allowable under subpart C of part IV of subchapter A of chapter 1 only if an election under subsection (g) or (h) of section 6013 is in effect for such taxable year. The preceding sentence shall not apply to any credit so allowed by reason of section 1446. **(c) Rule where no tax liability** An amount paid as tax shall not be considered not to constitute an overpayment solely by reason of the fact that there was no tax liability in respect of which such amount was paid.

Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 6401

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Federal law — U.S. Code and appendices · legal_authorities

26 U.S.C. § 1446 — Withholding of tax on foreign partners’

Page 2536 TITLE 26—INTERNAL REVENUE CODE § 1446 Pub. L. 99–514, § 1810(f)(4), amended par. (1) generally. Prior to amendment, par. (1) read as follows: ‘‘A domes- tic partnership, the trustee of a domestic trust, or the executor of a domestic estate shall be required to de- duct and withhold under subsection (a) a tax equal to 10 percent of any amount of which such partnership, trustee, or executor has custody which is— ‘‘(A) attributable to the disposition of a United States real property interest (as defined in section 897(c), other than a disposition described in paragraph (4) or (5)), and ‘‘(B) either— ‘‘(i) includible in the distributive share of a part- ner of the partnership who is a foreign person, ‘‘(ii) includible in the income of a beneficiary of the trust or estate who is a foreign person, or ‘‘(iii) includible in the income of a foreign person under the provisions of section 671.’’ Subsec. (e)(2). Pub. L. 99–514, § 311(b)(4), substituted ‘‘34 percent’’ for ‘‘28 percent’’. Subsec. (e)(3). Pub. L. 99–514, § 1810(f)(5), inserted ‘‘The preceding sentence shall not apply if, as of the date of the distribution, interests in such corporation are not United States real property interests by reason of sec- tion 897(c)(1)(B).’’ Subsec. (e)(4). Pub. L. 99–514, § 1810(f)(6), substituted ‘‘section 897’’ for ‘‘section 897(g)’’. Subsec. (e)(6). Pub. L. 99–514, § 1810(f)(8), inserted ‘‘and regulations for the application of this subsection in the case of payments through 1 or more entities’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2017 AMENDMENT Amendment by Pub. L. 115–97 applicable to distribu- tions made after Dec. 31, 2017, see section 13001(c)(2) of Pub. L. 115–97, set out as a note under section 11 of this title. EFFECTIV

Source: Supplied 2024 U.S. Code historical extraction · 26 U.S.C. § 1446

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