Except as otherwise provided in subsection (c), all persons, in whatever capacity acting (including lessees or mortgagors of real or personal property, fiduciaries, employers, and all officers and employees of the United States) having the control, receipt, custody, disposal, or payment of any of the items of income specified in subsection (b) (to the extent that any of such items constitutes gross income from sources within the United States), of any nonresident alien individual or of any foreign partnership shall (except as otherwise provided in regulations prescribed by the Secretary under section 874) deduct and withhold from such items a tax equal to 30 percent thereof, except that in the case of any item of income specified in the second sentence of subsection (b), the tax shall be equal to 14 percent of such item.
(1) incident to a qualified scholarship to which applies, but only to the extent includible in gross income; or
(2) in the case of an individual who is not a candidate for a degree at an educational organization described in section 170(b)(1)(A)(ii), granted by—
in the case of an individual who is not a candidate for a degree at an educational organization described in section 170(b)(1)(A)(ii), granted by—
(A) an organization described in which is exempt from tax under ,
(B) a foreign government,
(C) an international organization, or a binational or multinational educational and cultural foundation or commission created or continued pursuant to the Mutual Educational and Cultural Exchange Act of 1961, or
(D) the United States, or an instrumentality or agency thereof, or a State, or a possession of the United States, or any political subdivision thereof, or the District of Columbia,
as a scholarship or fellowship for study, training, or research in the United States. In the case of a nonresident alien individual who is a member of a domestic partnership, the items of income referred to in subsection (a) shall be treated as referring to items specified in this subsection included in his distributive share of the income of such partnership.
(1) Income connected with United States business
No deduction or withholding under subsection (a) shall be required in the case of any item of income (other than compensation for personal services) which is effectively connected with the conduct of a trade or business within the United States and which is included in the gross income of the recipient under for the taxable year.
(2) Owner unknown
The Secretary may authorize the tax under subsection (a) to be deducted and withheld from the interest upon any securities the owners of which are not known to the withholding agent.
(3) Bonds with extended maturity dates
The deduction and withholding in the case of interest on bonds, mortgages, or deeds of trust or other similar obligations of a corporation, within subsections (a), (b), and (c) of section 1451 (as in effect before its repeal by the Tax Reform Act of 1984) were it not for the fact that the maturity date of such obligations has been extended on or after
(4) Compensation of certain aliens
Under regulations prescribed by the Secretary, compensation for personal services may be exempted from deduction and withholding under subsection (a).
(5) Special items
In the case of gains described in or (c), and gains subject to tax under , the amount required to be deducted and withheld shall, if the amount of such gain is not known to the withholding agent, be such amount, not exceeding 30 percent of the amount payable, as may be necessary to assure that the tax deducted and withheld shall not be less than 30 percent of such gain.
(6) Per diem of certain aliens
No deduction or withholding under subsection (a) shall be required in the case of amounts of per diem for subsistence paid by the United States Government (directly or by contract) to any nonresident alien individual who is engaged in any program of training in the United States under the Mutual Security Act of 1954, as amended.
(7) Certain annuities received under qualified plans
No deduction or withholding under subsection (a) shall be required in the case of any amount received as an annuity if such amount is, under , exempt from the tax imposed by .
(8) Original issue discount
The Secretary may prescribe such regulations as may be necessary for the deduction and withholding of the tax on original issue discount subject to tax under including rules for the deduction and withholding of the tax on original issue discount from payments of interest.
(9) Interest income from certain portfolio debt investments
In the case of portfolio interest (within the meaning of ), no tax shall be required to be deducted and withheld from such interest unless the person required to deduct and withhold tax from such interest knows, or has reason to know, that such interest is not portfolio interest by reason of or (4).
(10) Exception for certain interest and dividends
No tax shall be required to be deducted and withheld under subsection (a) from any amount described in .
(11) Certain gambling winnings
No tax shall be required to be deducted and withheld under subsection (a) from any amount exempt from the tax imposed by by reason of .
(12) Certain dividends received from regulated investment companies
(A) In general
No tax shall be required to be deducted and withheld under subsection (a) from any amount exempt from the tax imposed by by reason of .
(B) Special rule
For purposes of subparagraph (A), clause (i) of shall not apply to any dividend unless the regulated investment company knows that such dividend is a dividend referred to in such clause. A similar rule shall apply with respect to the exception contained in .
Subject to such terms and conditions as may be provided by regulations prescribed by the Secretary, subsection (a) shall not apply in the case of a foreign partnership engaged in trade or business within the United States if the Secretary determines that the requirements of subsection (a) impose an undue administrative burden and that the collection of the tax imposed by on the members of such partnership who are nonresident alien individuals will not be jeopardized by the exemption.
For purposes of this section, the term “nonresident alien individual” includes an alien resident of Puerto Rico.
For sources of income derived from, or for services performed with respect to, the exploration or exploitation of natural resources on submarine areas adjacent to the territorial waters of the United States, see section 638.
For provision treating 85 percent of social security benefits as subject to withholding under this section, see .