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II. Taxation and the Source of Income
IRC §§ 861 through 999 (Subchapter N) address the taxation of income
from sources inside and outside the United States providing the details necessary
to determine the source of the income and the appropriate tax rate to apply (depending
on the character of the income). The general rule for foreign persons is that
income connected with the conduct of a U.S. trade or business (commonly referred
to as Effectively Connected Income) is subject to U.S. tax using the same graduated
rates that apply to U.S. persons. In contrast, income items of foreign persons
that are fixed or determinable annually or periodically are generally taxed at
a fixed rate of 30% (or the applicable treaty rate).
Note: This page contains one or more references to Internal Revenue Code
(IRC) sections. A link to the Internal Revenue Code is included for the convenience
of those who would like to read the technical reference material. To access
the applicable Internal Revenue Code sections visit the Tax
Code, Regulations, and Official Guidance page.
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