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SEC. 1402– Continued ANCILLARY PROVISIONS (P.L. 85–239, § 4)—Continued Act for months beginning after, and lump sum death payments under such title in the case of deaths occurring after, the date of the enactment of this Act (Aug. 30, 1957). (b) Notwithstanding subsection (a), in the case of any individual who

(1) (A) has remuneration which is deemed, by reason of section 3, to constitute remuneration for employment for purposes of title II of the Social Security Act, or

"(B) has income which constitutes net earnings from selfemployment under such title by reason of the filing of a certificate pursuant to section 1402 (e) (3) (A) or (B) of the Internal Revenue Code of 1954, and

“(2) was entitled to monthly insurance benefits under title II of the Social Security Act for the month in which this Act is enacted, section 3 and the amendments made by the first section of this Act shall apply with respect to monthly insurance benefits under such title based on his wages and selfemployment income only if he, or any other person entitled to monthly insurance benefits under such title on the basis of such wages and self-employment income, files, on or after the date of enactment of this Act, an application for recomputation by reason of this Act. Such recomputation shall be made in the manner provided in title II of the Social Security Act as in effect at the time of the last previous computation or recomputation of such individual's primary insurance amount and as though the application therefor was filed in the month in which the application for such last previous computation or recomputation was filed. No recomputation under this subsection shall be regarded as a recomputation under section 215(f) of the Social Security Act. Any such recomputation shall be effective for and after the twelfth month before the month in which the application therefor is filed, but in no case for any month which begins on or prior to the date of the enactment of this Act. Any such recomputation shall be effective only if it results in a higher primary insurance amount.

(c) The preceding provisions of this section shall not render erroneous any monthly insurance benefits under title II of the Social Security Act for the month in which this Act is enacted or any prior month."

The “Section 3" referred to was as follows:

“SEC. 3. Remuneration which is deemed under section 1402(e)(4) of the Internal Revenue Code of 1954 to constitute remuneration for employment shall also be deemed, notwithstanding sections 210(a)(8)(A) and 211(c) of the Social Security Act, to constitute remuneration for employment (and not net earnings from self-employment) for the purposes of title II of such Act.” SEC. 1403. MISCELLANEOUS PROVISIONS (68A Stat. 355): (b)(2)--- Sept. 13, 1960, H.R. 12580, P.L. 86–778, § 103(m), 74 Stat. 938:

Amended paragraph (2) of Sec. 1403(b) 338 (cross references) by inserting after "Virgin Islands”

", Guam, American Samoa,”. Effective Date:

September 13, 1960—the date of enactment.

338 Section 1403 originally read as follows (68 A Stat. 355): "SEC. 1403. MISCELLANEOUS PROVISIONS.

(a) TITLE OF CHAPTER.—This chapter may be cited as the "Self-Employment Contributions Act of 1954".

“(b) CROSS REFERENCES.

) For provisions relating to returns, see section 6017.
) For provisions relating to collection oftaxes in Virgin Islands and Puerto Rico, see section 7651."

CHAPTER 3-WITHHOLDING OF TAX ON NONRESIDENT ALIENS

AND FOREIGN CORPORATIONS AND TAX-FREE

COVENANT BONDS (68A Stat. 357, ff.): NOTE: The table of subchapters for Chapter 3, and the heading and table of

sections of Subchapter A of such Chapter 3, read as follows (68A Stat. 357):

"SUBCHAPTER A. Nonresident aliens and foreign corporations. "SUBCHAPTER B. Tax-free covenant bonds.

"SUBCHAPTER C. Application of withholding provisions.
“Subchapter A—Nonresident Aliens and Foreign Corporations

"Sec. 1441. Withholding of tax on nonresident aliens.
"Sec. 1442. Withholding of tax on foreign corporations.

"Sec. 1443. Foreign tax-exempt organizations.

The above tables and heading have not been amended. SEC. 1441. WITHHOLDING OF TAX ON NONRESIDENT ALIENS

(68A Stat. 357–358):

Sept. 21, 1961, H.R. 8666, P.L. 87-256, § 110(d)(1), 75 Stat. 536: (clause

Amended Sec. 1441(a) 339 by inserting before the period at the end added)

the following:

except that in the case of any item of income specified in the second sentence of subsection (b), the tax shall be equal to 18 percent

of such item".
Applicability:
Payments made after December 31, 1961.

(Id., $ 110(h)(2), 75 Stat. 537.) Do.--- Feb. 26, 1964, H.R. 8363, P.L. 88,272, & 302(c), 78 Stat. 146: (rate changed) Amended Sec. 1441(a) (as amended by P.L. 87-256, $ 110(d)(1))

by striking out

“18 percent"
and inserting in lieu thereof —

“14 percent".
Applicability:

Payments made after March 4, 1964—the seventh day (1964 was a leap year) following the date (February 26, 1964) of enactment.

(Id., 8 302(d), 78 Stat. 146.) (b).

Sept. 2, 1958, H.R. 8381, P.L. 85–866, $ 40(b), 72 Stat. 1638:
Amended Sec. 1441(b) 340 by inserting after "section 402(a)(2),”—

“section 403(a)(2),”.

33. Subsection (a) of section 1441 originally read as follows (68 A Stat. 357):

"(a) GENERAL RULE.-Except as otherwise provided in subsection (c), all persons, in whatever capacity acting (including lesees 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 partnership not engaged in trade or business within the United States and composed in whole or in part of nonresident

aliens, shall (except in the cases provided for in section 1451 and except as otherwise provided in regulations prescribed by the Secretary or his delegate under section 874) deduct and withhold from such items a tax equal to 30 percent thereof."

340 Subsection (b) of Section 1441 originally read as follows (68A Stat. 357):

"(b) INCOME ITEMS.-— The items of income referred to in subsection (a) are interest (except interest on deposits with persons carrying on the banking business paid to persons not engaged in business in the United States), dividends, rent, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable annual or periodical gains, profits, and income, and amounts described in section 402(a)(2), section 631(b) and (c), and section 1235, which are considered to be gains from the sale or exchange of capital assest.”

60-448-67-35

the United Stat alien individual owship grant whi

SEC. 1441-Continued
(b) (amended 1958)—Continued

Effective Date:
September 3, 1958-the day following the date of enactment.

(Id., $ 40(c), 72 Stat. 1639.) Do.--

Sept. 21, 1961, H.R. 8666, P.L. 87-256, § 110(d) (2), 75 Stat. 536: (sentence Āmended Sec. 1441(b) (as amended by P.L. 85–866, § 40(b)) by added)

adding at the end the following new sentence:

“The items of income referred to in subsection (a) from which tax shall be deducted and withheld at the rate of 18 percent are

“(1) that portion of any scholarship or fellowship grant which is received by a nonresident alien individual who is temporarily present in the United States as a nonimmigrant under subparagraph (F) or (J) of section 101(a)(15) of the Immigration and Nationality Act, as amended, and which is not excluded from gross income under section 117(a)(1) solely by reason of section 117(b)(2)(B); and

"(2) amounts described in subparagraphs (A), (B), (C), and (D) of section 117(a)(2) which are received by any such nonresident alien individual and which are incident to a scholarship or fellowship grant to which section 117(a)(1) applies, but only to

the extent such amounts are includible in gross income.”
Applicability:
Payments made after December 31, 1961.

(Id., § 110(h)(2), 75 Stat. 537.) Do.------- Feb. 26, 1964, H.R. 8363, P.L. 88,272, 302(c), 78 Stat. 146: (rate changed) Amended Sec. 1441(b) (as amended by P.L. 87-256, § 110(d)(2)) by

striking out

"18 percent”
and inserting in lieu thereof,

“14 percent”.
Applicability:

Payments made after March 4, 1964—the seventh day (February had 29 days) following the date (February 26, 1964) of enactment.

(Id., § 302(d), 78 Stat. 146.) ((c)4)------ Sept. 21, 1961, H.R. 8666, P.L. 87—256, § 110(d)(3), 75 Stat. 536: (in full)

Amended Sec. 1441(c)(4) 341 to read as follows:

(4) COMPENSATION OF CERTAIN ALIENS.—Under regulations a prescribed by the Secretary or his delegate, there may be exempted

from deduction and withholding under subsection (a) the compensation for personal services of

(A) nonresident alien individuals who enter and leave the United States at frequent intervals, and

“(B) a nonresident alien individual for the period he is temporarily present in the United States as a nonimmigrant under subparagraph (F) or (J) of section 101(a)(15) of the Immigration

and Nationality Act, as amended.”
Applicability:
Payments made after December 31, 1961.

(Id., § 110(h)(2), 75 Stat. 537.)

341 Paragraph (4) of section 1441(c) originally read as follows (68A Stat. 358):

“(4) COMPENSATION OF CERTAIN ALIENS. --Under regulations prescribed by the Secretary or his delegate, there may be exempted from deduction and withholding under subsection (a) the compensation for personal services of nonresident alien individuals who enter and leave the United States at frequent intervals.”

SEC. 1441

Continued (c)(5) Sept. 2, 1958, H.R. 8381, P.L. 85–866, § 40(b), 72 Stat. 1638: (in part)

Amended Sec. 1441(c)(5) 342 by inserting after "section 402(a)(2),”—

"section 403(a)(2),”. Effective Date: September 3, 1958--the day following the date of enactment.

(Id., $ 40(c), 72 Stat. 1639.) (c)(6) July 18, 1956, H.R. 11356, P.L. 84-726, § 11(a), 70 Stat. 563: (added)

Amended Sec. 1441(c) by adding after paragraph (5) (special items) the following new paragraph (6): 343

"(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."
Effective Date:

July 18, 1956—the date of enactment.
CH. 3, SUBCHAPTER B_TAX-FREE COVENANT BONDS (68A Stat.

359): NOTE: The table of sections for Subchapter B of Chapter 3 reads as follows:

“Sec. 1451. Tax-free covenant bonds."

No amendments have been made to this table or to section 1451. CH. 3, SUBCHAPTER C-APPLICATION OF WITHHOLDING PRO

VISIONS (68A Stat. 360):
NOTE: The table of sections for Subchapter C of Chapter 3 reads as follows:

"Sec. 1461. Return and payment of withheld tax.
“Sec. 1462. Withheld tax as credit to recipient of income.
“Sec. 1463. Tax paid by recipient of income.
“Sec. 1464. Refunds and credits with respect to withheld tax.

“Sec. 1465. Definition of withholding agent."
No amendments have been made to this table or to any of the sections

listed therein. CHAPTER 4-RULES APPLICABLE TO RECOVERY OF EXCESSIVE

PROFITS ON GOVERNMENT CONTRACTS (68A Stat. 361, ff.): NOTE: The table of subchapters for Chapter 4 and the heading and table of sec

tions of Subchapter A of such Chapter 4 read as follows (68 A Stat, 361):

"SUBCHAPTER A. Recovery of excessive profits on government contracts.

“SUBCHAPTER B. Mitigation of effect of renegotiation of government contracts. “Subchapter A-Recovery of Excessive Profits on Government

Contracts “Sec. 1471. Recovery of excessive profits on Government contracts.” No amendments have been made to the above tables and heading or to section 1471.

H2 Paragraph (5) of section 1441(c) originally read as follows (68A Stat. 358): “(5) SPECIAL ITEMS.-- In the case of amounts described in section 402(a) (2), section 631 (b) and (c), and section 1235, which are considered to be gains from the sale or exchange of capital assets, 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 proceeds from such sale or exchange, as may be necessary to assure that the tax deducted and withheld shall not be less than 30 percent of such gain.”

343 The above amendment was accomplished by an amendment to section 544 of the Mutual Security Act of 1954 (83d Cong., Ch. 937, P.L. 665, 68 Stat. 832, 862-relating to amendments to other laws) which added to such section 544 certain new subsections, including a subsection (f) which amended section 1441(c) of the Internal Revenue Code of 1954 by adding the above new paragraph (6).

CH. 4, SUBCHAPTER B-MITIGATION OF EFFECT OF RENEGO

IATION OF GOVERNMENT CONTRACTS (68A Stat. 362, ff.):

--- Sept. 2, 1958, H.R. 8381, P.L. 85-866, § 62(b), 72 Stat. 1648: (Sec. 1482 Amended the table of sections for Subchapter B of Chapter 4, added)

reading as follows (68 A Stat. 362):
"Sec. 1481. Mitigation of effect of renegotiation of government con-

tracts.”,
by adding at the end thereof the following:
“Sec. 1482. Readjustment for repayments made pursuant to price re-

determinations.' Applicability:

Only with respect to subcontracts entered into after December 31, 1957.

(Id., $ 62(c), 72 Stat. 1648.) SEC. 1481. MITIGATION OF EFFECT OF RENEGOTIATION OF

GOVERNMENT CONTRACTS (68A Stat. 362–364): (b)(2)(A) (i) - June 21, 1965, H.R. 8371, P.L. 89–44, $ 809(d)(5) (B), 79 Stat. 168: (in part)

Amended Sec. 1481(b)(2)(A)(i) 344 (relating to credit against repayment on account of renegotiation or allowance) by striking out

“(b) (1) and (3)”.
and inserting in lieu thereof

"(b) (1), (3), and (4)”.
Applicability:
Taxable years beginning on or after July 1, 1965.

(Id., § 809(f), 79 Stat. 168.)

344 Prior to this amendment section 1481 read as follows (68A Stat. 362-364): “SEC 1481. MITIGATION OF EFFECT OF RENEGOTIATION OF GOVERNMENT CONTRACTS.

(a) REDUCTION FOR PRIOR TAXABLE YEAR.

"(1) EXCESSIVE PROFITS ELIMINATED FOR PRIOR TAXABLE YEAR.-In the case of a contract with the United States or any agency thereof, or any subcontract thereunder, which is made by the taxpayer, if a renegotiation is made in respect of such contract or subcontract and an amount of excessive profits received or accrued under such contract or subcontract for å taxable year (referred to in this section as 'prior taxable year') is eliminated and, the taxpayer is required to pay or repay to the United States or any agency thereof the amount of excessive profits eliminated or the amount of excessive profits elininated is applied as an offset against other amounts due the taxpayer, the part of the contract or subcontract price which was received or was accrued for the prior taxable year shall be reduced by the amount of excessive profits eliminated. For purposes of this section

(A) The term 'renegotiation' includes any transaction which is a renegotiation within the meaning of the Federal renegotiation act applicable to such transaction, any modificacation of one or more contracts with the United States or any agency thereof, and any agreement with the United States or any agency thereof in respect of one or more such contracts or subcontracts thereunder.

“(B) The term 'excessive profits' includes any amount which constitutes excessive profits within the meaning assigned to such term by the applicable Federal renegotiation act, any part of the contract price of a contract with the United States or any agency thereof, any part of the subcontract price of a subcontract under such a contract, and any profits derived from one or more such contracts or subcontracts.

"(C) The term 'subcontract' includes any purchase order or agreement which is a subcontract within the meaning assigned to such term by the applicable Federal renegotiation act.

“(D) The term 'Federal renegotiation act' includes section 403 of the Sixth Supplemental National Defense Appropriation Act (Public Law 528, 77th Cong., 2d Sess.), as amended or supplemented, the Renegotiation Act of 1948, as amended or supplemented, and the Renegotiation Act of 1951, as amended or supplemented

“(2) REDUCTION OF REIMBURSEMENT FOR PRIOR TAXABLE YEAR.- In the case of a castplus-a-fixed-fee contract between the United States or any agency thereof and the taxpayer, if an item for which the taxpayer has been reimbursed is disallowed as an item of cost chargeable to such contract and the taxpayer is required to repay the United States or any agency

thereof the amount disallowed or the amount disallowed is applied as an offset against other (Footnote 344 continued on following page]

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