Guillermo Baez Espinosa - Page 11

                                       - 11 -                                         

          was reenacted throughout the years,6 and carried into current               
          section 882(c)(2).7                                                         
               Sections 874(a) and 882(c)(2) are draconian provisions                 
          designed to induce foreign corporations and nonresident alien               
          individuals to file tax returns.  In Blenheim Co. v.                        
          Commissioner, 125 F.2d 906, 909 (4th Cir. 1942), affg. 42 B.T.A.            
          1248 (1940), the Court of Appeals for the Fourth Circuit                    
               Indeed, unless a foreign corporation is induced voluntarily            
               to advise the Commissioner of all of its income attributable           
               to sources within the United States and of the exact nature            
               of all deductions from such income, the Commissioner may               
               never learn even of the corporation's existence, and, in any           
               event, * * * [the Commissioner] will probably be unable to             
               determine the correct amount of its taxable income.                    
                    The situation is pregnant with possibilities of tax               
               evasion.  In express recognition of this fertile danger to             
               the orderly administration of the income tax as applied to             
               foreign corporations, Congress conditioned its grant of                
               deductions upon the timely filing of true, proper and                  
               complete returns. * * *                                                
               While both sections 874(a) and 882(c)(2) are venerable,                
          there are few cases dealing with these provisions.  In fact,                
          there are no cases dealing squarely with the application of                 

          6   Sec. 233 of the Revenue Act of 1932, 47 Stat. 230,                      
          provided that "A foreign corporation shall receive the benefit of           
          the deductions and credits allowed to it in this title only by              
          filing or causing to be filed with the collector a true and                 
          accurate return * * * in the manner prescribed in this title".              
          7   The language of sec. 882(c)(2) is virtually identical to                
          the language of sec. 874(a) except that sec. 882(c)(2) uses the             
          words "foreign corporation" in place of the words "nonresident              
          alien individual".                                                          

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011