Withholding of Tax on Nonresident Aliens

(a)   General rule  

All persons, who controls or makes 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 US, of any nonresident alien individual or of any foreign partnership shall deduct and withhold from such items a tax equal to 30 percent  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.

(b) Income items

The items of income referred to in subsection (a) are interest , dividends, rent, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable annual or periodical gains, profits, and income, gains.

 The items of income referred to in subsection (a) from which tax shall be deducted and withheld at the rate of 14 percent are amounts which are received by a nonresident alien individual who is temporarily present in the United States as a nonimmigrant which are incident to a qualified scholarship.

(c) Exceptions include but are not limited to:

(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.

 (2) Certain gambling winnings

Generally, no tax shall be required to be deducted and withheld.

(3) Certain dividends received from regulated investment companies