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Art. 368. Use of substitute certificates.—Resident collecting agents, including responsible banks and bankers receiving interest coupons for collection with ownership certificates attached, may present the coupons with the original certificates to the debtor corporation or its duly authorized withholding agent for collection, or may detach and forward the original certificates directly to the Commissioner, provided each such collecting agent shall substitute for such original certificates its own certificates, Form 1058 or Form 1059, and shall keep a complete record of each transaction, showing (a) serial number of item received; (b) date received; (c) name and address of person from whom received; (d) name of debtor corporation; (e) class of bonds from which coupons were cut (whether containing a tax-free covenant or not); and (f) face amount of coupons. The original certificate for which the certificate of the collecting agent is substituted shall be indorsed, preferably with a rubber stamp, by the collecting agent, as follows:

Owner's certificate No.

(Name of collecting agent.)

19_-.

(Give date of certificate.)
The counterpart of the within certificate bearing like number
was attached to the coupons within mentioned for delivery to the

debtor or withholding agent, by whom the coupons are payable. For the purpose of identification the substitute certificates shall be numbered consecutively, reverting to the numeral 1 at the beginning of each calendar year, and corresponding numbers given the original certificates of ownership. The use of substitute certificates by collecting agents, banks, and bankers is only permitted, however, in the case of ownership certificates presented with coupons for collection by citizens or residents of the United States (individual or fiduciary) or resident partnerships.

Art. 369. Interest coupons without ownership certificates.-When interest coupons are received unaccompanied by certificates of ownership, unless the first bank be satisfied that the owner is a citizen of the United States or a resident individual, fiduciary, partnership, or corporation, the first bank shall require of the payee a statement showing the name and address of the payee, the name and address of the debtor corporation, the date of the maturity of the interest, the name and address of the person from whom the coupons were received, the amount of the interest, and a statement 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 first bank receiving such coupons shall also prepare a certificate on Form 1000, crossing out“ owner” and inserting

" “payee ” and entering the amount of interest on line 4, and shall

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stamp or write across the face of the certificate “ Statement furnished," adding the name of the bank.

Art. 370. Interest on registered bonds.—Ownership certificates are required in connection with interest on registered bonds, as in the case of coupon bonds, if such bonds contain a tax-free covenant clause or if such bonds are owned by a nonresident alien (individual or fiduciary), a partnership not engaged in trade or business within the United States and not having any office or place of business therein, composed in whole or in part of nonresident aliens, or a foreign corporation having no office or place of business within the United States and not engaged in trade or business therein. If ownership certificates are not furnished by the owner of the bonds, such certificates must be prepared by the debtor corporation or its withholding agent. (a) If the bonds contain a tax-free covenant clause, ownership certificates must be prepared on Form 1000 for the following classes of bondholders: Citizens or residents of the United States (individual or fiduciary), nonresident aliens (individual or fiduciary), partnerships, whether foreign or domestic, and foreign corporations having no office or place of business within the United States and not engaged in trade or business therein. (6). If the bonds do not contain a tax-free covenant clause Form 1000 shall be prepared in the case of nonresident aliens (individual or fiduciary), partnerships not engaged in trade or business within the United States and not having any office or place of business therein, composed in whole or in part of nonresident aliens, and foreign corporations not engaged in trade or business within the United States and not having any office or place of business therein. Whether or not registered bonds contain a tax-free covenant clause, no ownership certificate is required in connection with registered bonds owned by domestic or resident corporations.

ART. 371. Return of tax withheld.—(a) Every withholding agent shall make an annual return of the tax withheld from interest on corporate bonds or other obligations on or before March 15 on Form 1013. This return need not be executed in duplicate and 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 original ownership certificates, or the substitute certificates where authorized, must be forwarded to the Commissioner with the monthly return, which need not be executed in duplicate. (8) 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), partnership not engaged in trade or business in the United States, and not having an office or place of business therein, composed in whole or in part of nonresident aliens, or foreign corporation not engaged in trade or business within the United States and not having any office or place of business therein, to whom income other than bond interest was paid during the previous taxable year. Form 1042 (no duplicate necessary) 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 attaching upon failure to make such returns or such payment, see sections 276 and 1017 of the statute, section 3176 of the Revised Statutes as amended, and articles 1261 and 1361.

206°—24--10

а.

ART. 372. Release of excess tax withheld from interest on bank deposits.—The withholding provisions of section 221(a) of the Revenue Act of 1924 apply to payments made after 4.01 p. m., eastern standard time, June 2, 1924.

During 1924 prior to the passage of the Revenue Act of 1924 withholding was required at the rates imposed by the Revenue Act of 1921. Therefore, with respect to income subject to the provisions of section 221(a), withholding agents were required to withhold at the rate of 8 per cent. Any sum withheld for tax since December 31, 1923, in excess of the amount required to be withheld under section 221(a) of the Revenue Act of 1924 (except compensation for services performed within the United States by aliens who are residents of a contiguous country, as to which see article 373), shall be released by the withholding agent and paid over to the person from whom it was withheld or his proper representative. In order to reconcile the discrepancy between the aggregate amount of tax as shown by the monthly returns, Form 1012, and the annual return, Form 1013, required to be filed after the close of the calendar year 1924, an itemized statement showing names, addresses, and amounts refunded should be attached to the annual return, Form 1013. It will be unnecessary to make any reference on Form 1042 to the refund of excess tax withheld from the income reported on such return.

ART. 373. Release of excess tax withheld from compensation paid alien residents of a contiguous country.-Any sum withheld for tax since December 31, 1923, from the compensation paid aliens who are residents of Canada or Mexico for services rendered within the United States which exceeds the amount of the tax imposed by section 210(b) of the statute shall be released to such alien by the employer. Such tax, however, may only be released by the em

ployer if the nonresident alien files a properly executed Form 1115 establishing the fact that he is a resident of Canada or Mexico. If Form 1115 has already been filed by the alien during the year 1924, it will be unnecessary to file another form in order that the total amount of the excess tax may be released and paid over to him.

Art. 374. Use of information return where no actual withholding Where a debtor corporation or its duly authorized withholding agent has made payments of interest on its bonds, but in certain instances has been required to withhold no tax, the ownership certificates on Form 1001 filed in connection with such payments shall be transmitted to the Commissioner, accompanied by a return on Form 1096 A showing the number of ownership certificates thus transmitted and the total amount of interest paid. This return shall be made by the 20th day of each month following that for which the return is made and need not be sworn to. An annual return shall be forwarded to the Commissioner not later than March 15 of each year on Form 1096 B, on which shall be given a summary of the monthly returns. To the extent that there has been actual withholding of the tax, returns should be made in accordance with article 371.

ART. 375. Ownership certificates in the case of fiduciaries and joint owners.—When 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. When bonds are owned jointly by two or more persons, a separate ownership certificate must be executed in behalf of each of the owners.

ART. 376. Return of income from which tax 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 actually so withheld shall be credited against the total tax as computed in the taxpayer's return. See article 31. 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.

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CREDIT FOR TAXES IN CASE OF INDIVIDUALS

SEC. 222. (a.) The tax computed under Parts I and II of this title shall be credited with:

(1) In the case of a citizen of the United States the amount of any income, war-profits and excess-profits taxes paid or accrued during the taxable year to any foreign country or to any possession of the United States; and

(2) In the case of a resident of the United States, the amount of any such taxes paid or accrued during the taxable year to any possession of the United States; and

(3) In the case of an alien resident of the United States, the amount of any such taxes paid or accrued during the taxable year to any foreign country, if the foreign country of which such alien resident is a citizen or subject, in imposing such taxes, allows a similar credit to citizens of the United States residing in such country; and

(4) In the case of any such individual who is a member of a partnership or a beneficiary of an estate or trust, his proportionate share of such taxes of the partnership or the estate or trust paid or accrued during the taxable year to a foreign country or to any possession of the United States, as the case may be. • (5) The above credits shall not be allowed in the case of a citizen entitled to the benefits of section 262; and in no other case shall the amount of credit taken under this subdivision exceed the same proportion of the tax (computed on the basis of the taxpayer's net income without the deduction of any income, war-profits, or excess-profits tax any part of which may be allowed to him as a credit by this section), against which such credit is taken, which the taxpayer's net income (computed without the deduction of any such income, war-profits, or excess-profits tax) from sources without the United States bears to his entire net income (computed without such deduction) for the same taxable year.

(b) If accrued taxes when paid differ from the amounts claimed as credits by the taxpayer, or if any tax paid is refunded in whole or in part, the taxpayer shall notify the Commissioner, who shall redetermine the amount of the tax due under Parts I and II of this title for the year or years affected, and the amount of tax due upon such redetermination, if any, shall be paid by the taxpayer upon notice and demand by the collector, or the amount of tax overpaid, if any, shall be credited or refunded to the taxpayer in accordance with the provisions of section 281. In the case of such a tax accrued but not paid, the Commissioner as a condition precedent to the allowance of this credit may require the taxpayer to give a bond with sureties satisfactory to and to be approved by the Commissioner in such sum as the Commissioner may require, conditioned upon the payment by the taxpayer of any amount of tax found due upon any such redetermination; and the bond herein prescribed shall contain such further conditions as the Commissioner may require.

(c) The credits provided for in subdivision (a) of this section may, at the option of the taxpayer and irrespective of the method of accounting employed in keeping his books, be taken in the year in which the taxes of the foreign country or the possession of the United States accrued, subject, however, to the conditions prescribed in subdivision (b) of this section. If the taxpayer elects to take such credits in the year in which the taxes of the foreign country or the possession of the United States accrued, the credits for all subsequent years shall be taken upon the same basis.

(d) These credits shall be allowed only if the taxpayer furnishes evidence satisfactory to the Commissioner showing the amount of income derived from sources without the United States, and all other information necessary for the verification and computation of such credits.

ART. 381. Analysis of credit for taxes.-(1) In the case of a citizen of the United States, whether resident or nonresident, the basis of the credit for taxes is as follows: (a) The amount of any income, war-profits, and excess-profits taxes paid or accrued during the

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