26 U.S.C. § 1444 — Withholding on Virgin Islands source in-

Page 2531 TITLE 26—INTERNAL REVENUE CODE § 1444 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 for- eign corporation engaged in trade or business within the United States if the Secretary or his delegate de- termines that the withholding imposes an undue ad- ministrative burden and that the collection of the tax will not be jeopardized by the exemption. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2004 AMENDMENT 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 appli- cable 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. EFFECTIVE DATE OF 1993 AMENDMENT Amendment by Pub. L. 103–66 applicable to interest received after Dec. 31, 1993, see section 13237(d) of Pub. L. 103–66, set out as a note under section 871 of this title. EFFECTIVE DATE OF 1988 AMENDMENT Amendment by Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title. EFFECTIVE DATE OF 1986 AMENDMENT Amendment by section 1273(b)(2)(B) of Pub. L. 99–514 applicable to taxable years beginning after Dec. 31, 1986, with certain exceptions and qualifications, see section 1277 of Pub. L. 99–514, set out as a note under section 931 of this title. Amendment by section 1810(d)(3)(E) of Pub. L. 99–514 effective, except as otherwise provided, as if included in the provisions of the Tax Reform Act of 1984, Pub. L. 98–369, div. A, to which such amendment relates, see section 1881 of Pub. L. 99–514, set out as a note under section 48 of this title. EFFECTIVE DATE OF 1984 AMENDMENT Amendment by section 127(e)(2) of Pub. L. 98–369 ap- plicable to interest received after July 18, 1984, with re- spect to obligations issued after such date, in taxable years after such date, see section 127(g)(1) of Pub. L. 98–369, set out as a note under section 871 of this title. Amendment by section 130(b) of Pub. L. 98–369 appli- cable to payments made after Mar. 1, 1984, in taxable years ending after such date, see section 130(d) of Pub. L. 98–369, set out as a note under section 881 of this title. Amendment by section 474(r)(29)(I) of Pub. L. 98–369 not applicable with respect to obligations issued before Jan. 1, 1984, see section 475(b) of Pub. L. 98–369, set out as a note under section 33 of this title. EFFECTIVE DATE OF 1972 AMENDMENT Pub. L. 92–606, § 2, Oct. 31, 1972, 86 Stat. 1497, provided in part that: ‘‘The amendment made by section 1(e)(2) [amending this section] shall take effect on the day after the date of enactment of this Act [Oct. 31, 1972].’’ EFFECTIVE DATE OF 1971 AMENDMENT Amendment by Pub. L. 92–178 applicable with respect to payments occurring on or after Apr. 1, 1972, see sec- tion 313(f) of Pub. L. 92–178, set out as a note under sec- tion 871 of this title. EFFECTIVE DATE OF 1966 AMENDMENT Amendment by Pub. L. 89–809 applicable with respect to taxable years beginning after Dec. 31, 1966, see sec- tion 104(n) of Pub. L. 89–809, set out as a note under sec- tion 11 of this title. PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989 For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of Pub. L. 99–514 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L. 99–514, as amended, set out as a note under section 401 of this title. WITHHOLDING OF TAX ON NONRESIDENT ALIENS AND FOREIGN CORPORATIONS For provisions relating to withholding of tax on non- resident aliens and foreign corporations, see Pub. L. 97–248, title III, § 342, Sept. 3, 1982, 96 Stat. 635, set out as a note under section 1441 of this title. § 1443. Foreign tax-exempt organizations (a) Income subject to section 511 In the case of income of a foreign organization subject to the tax imposed by section 511, this chapter shall apply to income includible under section 512 in computing its unrelated business taxable income, but only to the extent and sub- ject to such conditions as may be provided under regulations prescribed by the Secretary. (b) Income subject to section 4948 In the case of income of a foreign organization subject to the tax imposed by section 4948(a), this chapter shall apply, except that the deduc- tion and withholding shall be at the rate of 4 percent and shall be subject to such conditions as may be provided under regulations prescribed by the Secretary. (Aug. 16, 1954, ch. 736, 68A Stat. 358; Pub. L. 91–172, title I, §§ 101(j)(22), 121(d)(2)(C), Dec. 30, 1969, 83 Stat. 528, 547; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.) Editorial Notes AMENDMENTS 1976—Pub. L. 94–455 struck out ‘‘or his delegate’’ after ‘‘Secretary’’ in two places. 1969—Pub. L. 91–172, § 101(j)(22), designated existing provisions as subsec. (a) and added subsec. (b). Subsec. (a). Pub. L. 91–172, § 121(d)(2)(C), substituted ‘‘income’’ for ‘‘rents’’ after ‘‘this chapter shall apply to’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1969 AMENDMENT Amendment by section 101(j)(22) of Pub. L. 91–172 ef- fective Jan. 1, 1970, see section 101(k)(1) of Pub. L. 91–172, set out as an Effective Date note under section 4940 of this title. Amendment by section 121(d)(2)(C) of Pub. L. 91–172 applicable to taxable years beginning after Dec. 31, 1969, see section 121(g) of Pub. L. 91–172, set out as a note under section 511 of this title. § 1444. Withholding on Virgin Islands source in- come For purposes of determining the withholding tax liability incurred in the Virgin Islands pur- suant to this title (as made applicable to the Virgin Islands) with respect to amounts received Page 2532 TITLE 26—INTERNAL REVENUE CODE § 1445 from sources within the Virgin Islands by citi- zens and resident alien individuals of the United States, and corporations organized in the United States, the rate of withholding tax under sec- tions 1441 and 1442 on income subject to tax under section 871(a)(1) or 881 shall not exceed the rate of tax on such income under section 871(a)(1) or 881, as the case may be. (Added Pub. L. 97–455, § 1(b), Jan. 12, 1983, 96 Stat. 2497; amended Pub. L. 100–647, title I, § 1012(x), Nov. 10, 1988, 102 Stat. 3530.) Editorial Notes AMENDMENTS 1988—Pub. L. 100–647 struck out ‘‘(as modified by sec- tion 934A)’’ before ‘‘shall not exceed’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1988 AMENDMENT Amendment by Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title. EFFECTIVE DATE Section applicable to payments made after Jan. 12, 1983, see section 1(e)(2) of Pub. L. 97–455, set out as a note under section 934 of this title. § 1445. Withholding of tax on dispositions of United States real property interests (a) General rule Except as otherwise provided in this section, in the case of any disposition of a United States real property interest (as defined in section 897(c)) by a foreign person, the transferee shall be required to deduct and withhold a tax equal to 15 percent of the amount realized on the dis- position. (b) Exemptions (1) In general No person shall be required to deduct and withhold any amount under subsection (a) with respect to a disposition if paragraph (2), (3), (4), (5), or (6) applies to the transaction. (2) Transferor furnishes nonforeign affidavit Except as provided in paragraph (7), this paragraph applies to the disposition if the transferor furnishes to the transferee an affi- davit by the transferor stating, under penalty of perjury, the transferor’s United States tax- payer identification number and that the transferor is not a foreign person. (3) Nonpublicly traded domestic corporation furnishes affidavit that interests in cor- poration not United States real property interests Except as provided in paragraph (7), this paragraph applies in the case of a disposition of any interest in any domestic corporation if the domestic corporation furnishes to the transferee an affidavit by the domestic cor- poration stating, under penalty of perjury, that— (A) the domestic corporation is not and has not been a United States real property holding corporation (as defined in section 897(c)(2)) during the applicable period speci- fied in section 897(c)(1)(A)(ii), or (B) as of the date of the disposition, inter- ests in such corporation are not United States real property interests by reason of section 897(c)(1)(B). (4) Transferee receives qualifying statement (A) In general This paragraph applies to the disposition if the transferee receives a qualifying state- ment at such time, in such manner, and sub- ject to such terms and conditions as the Sec- retary may by regulations prescribe. (B) Qualifying statement For purposes of subparagraph (A), the term ‘‘qualifying statement’’ means a statement by the Secretary that— (i) the transferor either— (I) has reached agreement with the Secretary (or such agreement has been reached by the transferee) for the pay- ment of any tax imposed by section 871(b)(1) or 882(a)(1) on any gain recog- nized by the transferor on the disposi- tion of the United States real property interest, or (II) is exempt from any tax imposed by section 871(b)(1) or 882(a)(1) on any gain recognized by the transferor on the dis- position of the United States real prop- erty interest, and (ii) the transferor or transferee has satis- fied any transferor’s unsatisfied with- holding liability or has provided adequate security to cover such liability. (5) Residence where amount realized does not exceed $300,000 This paragraph applies to the disposition if— (A) the property is acquired by the trans- feree for use by him as a residence, and (B) the amount realized for the property does not exceed $300,000. (6) Stock regularly traded on established secu- rities market This paragraph applies if the disposition is of a share of a class of stock that is regularly traded on an established securities market. (7) Special rules for paragraphs (2), (3), and (9) Paragraph (2), (3), or (9) (as the case may be) shall not apply to any disposition— (A) if— (i) the transferee or qualified substitute has actual knowledge that the affidavit re- ferred to in such paragraph, or the state- ment referred to in paragraph (9)(A)(ii), is false, or (ii) the transferee or qualified substitute receives a notice (as described in sub- section (d)) from a transferor’s agent, transferee’s agent, or qualified substitute that such affidavit or statement is false, or (B) if the Secretary by regulations re- quires the transferee or qualified substitute to furnish a copy of such affidavit or state- ment to the Secretary and the transferee or