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. 766. Form of certificate for citizens or residents.--For the purpose of article 765, Form 1000 shall be used by 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, in connection with interest payments received on bonds containing a tax-free covenant. If such bonds 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. The amount of interest received on such bonds shall be entered on line 3 of Form 1000, except that in the case of a citizen or resident the interest should be entered on line 2 if the tax to be withheld is at the rate of 12 per cent as provided in article 761, or on line 1 if the net income does not exceed the personal exemption and other credits allowed by section 25. (See article 763.) ART. 767. Form of certificate for nonresident aliens, nonresident foreign corporations, and unknown owners.-For the purpose of article 765, Form 1001 shall be used in connection with interest payments on bonds, regardless of whether or not such bonds contain a tax-free covenant, (a) by nonresident aliens (individual or fiduciary), (b) by nonresident partnerships composed in whole or in part of nonresident aliens, (c) by nonresident foreign corporations, and (d) where the owner is unknown.

ART. 768. 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. Where Form 1000 is modified to show the name and address of a fiscal or paying agent in the United States (see article 766), 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 146 and 291 and articles 791 and 1211.

ART. 769. 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. 770. 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 recollected 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.

SEC. 145. PAYMENT OF CORPORATION
SOURCE.

INCOME TAX AT

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 144 a tax equal to 131⁄2 per centum thereof in respect of all payments of income made before the enactment of this Act, and equal to 12 per centum thereof in respect of all payments of income made after the enactment of this Act, 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 taxfree covenant bonds) the deduction and withholding shall be at the rate specified in such subsection.

ART. 781. Withholding in the case of nonresident foreign corporations.— In general, with respect to payments to nonresident foreign corporations (see article 1319) 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 except that such withholding is required at the rate of 12 per cent if the liability assumed by the obligor does not exceed 2 per cent of the interest. Withholding of a tax of 12 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 made after the enactment of the Revenue Act of 1928 to nonresident foreign corporations, except corporate dividends other than dividends distributed by a corporation organized under the China Trade Act, 1922, to a nonresident foreign corporation which is not a resident of China. (See also section 144 and articles 761–770.) As no withholding of tax on bond interest or other income is required in the case of a resident foreign corporation (see article 1319), the person paying such income should be notified by a letter from the corporation that it is not subject to the withholding provisions of the Act. The letter from the corporation shall contain the address of its office or place of business in the United States, and be signed by an officer of the corporation giving his official title. Such letters of notification shall be immediately forwarded by the recipients to the Commissioner of Internal Revenue, Sorting Section, Washington, D. C., to be examined.

SEC. 146. PENALTIES.

(a) Any person required under this title to pay any tax, or required by law or regulations made under authority thereof to make a return, keep any records, or supply any information, for the purposes of the computation, assessment, or collection of any tax imposed by this title, who willfully fails to pay such tax, make such return, keep such records, or supply such information, at the time or times required by law or regulations, shall, in addition to other penalties provided by law, be guilty of a misdemeanor and, upon conviction thereof, be fined not more than $10,000, or imprisoned for not more than one year, or both, together with the costs of prosecution.

(b) Any person required under this title to collect, account for, and pay over any tax imposed by this title, who willfully fails to collect or truthfully account for and pay over such tax, and any person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof, shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, be fined not more than $10,000, or imprisoned for not more than five years, or both, together with the costs of prosecution.

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(c) The term person as used in this section includes an officer or employee of a corporation or a member or employee of a partnership, who as such officer, employee, or member is under a duty to perform the act in respect of which the violation occurs.

ART. 791. Penalties.-The penalties provided for in section 146 can not be assessed but are enforceable only by suit or prosecution. For limitations on prosecutions, see the Act of July 5, 1884, as amended by the Revenue Act of 1924 and reenacted without change by section 1110 of the Revenue Act of 1926.

SEC. 147. CLOSING BY COMMISSIONER OF TAXABLE YEAR.

(a) Tax in jeopardy.-If the Commissioner finds that a taxpayer designs quickly to depart from the United States or to remove his property therefrom, or to conceal himself or his property therein, or to do any other act tending to prejudice or to render wholly or partly ineffectual proceedings to collect the tax for the taxable year then last past or the taxable year then current unless such proceedings be brought without delay, the Commissioner shall declare the taxable period for such taxpayer immediately terminated and shall cause notice of such finding and declaration to be given the taxpayer, together with a demand for immediate payment of the tax for the taxable period so declared terminated and of the tax for the preceding taxable year or so much of such tax as is unpaid, whether or not the time otherwise allowed by law for filing return and paying the tax has expired; and such taxes shall thereupon become immediately due and payable. In any proceeding in court brought to enforce payment of taxes made due and payable by virtue of the provisions of this section the finding of the Commissioner, made as herein provided, whether made after notice to the taxpayer or not, shall be for all purposes presumptive evidence of the taxpayer's design.

(b) Security for payment.-A taxpayer who is not in default in making any return or paying income, war-profits, or excess-profits tax under any Act of Congress may furnish to the United States, under regulations to be prescribed by the Commissioner, with the approval of the Secretary, security approved by the Commissioner that he will duly make the return next thereafter required to be filed and pay the tax next thereafter required to be paid. The Commissioner may approve and accept in like manner security for return and payment of taxes made due and payable by virtue of the provisions of this section, provided the taxpayer has paid in full all other income, war-profits, or excess-profits taxes due from him under any Act of Congress.

(c) Same-exemption from section.-If security is approved and accepted pursuant to the provisions of this section and such further or other security with respect to the tax or taxes covered thereby is given as the Commissioner shall from time to time find necessary and require, payment of such taxes shall not be enforced by any proceedings under the provisions of this section prior to the expiration of the time otherwise allowed for paying such respective taxes.

(d) Citizens. In the case of a citizen of the United States or of a possession of the United States about to depart from the United States the Commissioner may, at his discretion, waive any or all of the requirements placed on the taxpayer by this section.

(e) Departure of alien.-No alien shall depart from the United States unless he first procures from the collector or agent in charge a certificate that he has complied with all the obligations imposed upon him by the income, war-profits, and excess-profits tax laws.

(f) Addition to tax.-If a taxpayer violates or attempts to violate this section there shall, in addition to all other penalties, be added as part of the tax 25 per centum of the total amount of the tax or deficiency in the tax, together with interest at the rate of 1 per centum a month from the time the tax became due.

ART. 801. Termination of the taxable period by Commissioner.-Section 147 provides that in the case of a taxpayer who designs by immediate departure from the country or otherwise to avoid the payment of the tax for the preceding or current taxable year, the Commissioner may, upon evidence satisfactory to him, declare the taxable period for such taxpayer immediately terminated and cause the service upon him of a notice and demand for immediate payment of the tax for the taxable period declared terminated, and of the tax for the preceding taxable year, or so much of such tax as is unpaid. In such a case the taxpayer is entitled to the personal exemption and credit for dependents, if otherwise allowable under sections 25, 214, and 251 (see articles 291-295 and 1061), but such personal exemption. and credit for dependents shall be reduced proportionately to the length of the period for which the return is made. (See section 47 and article 371.) If suit is necessary to collect a tax made due and payable by the provisions of section 147, the Commissioner's finding