John A. Francisco - Page 7




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               2.   Grant to Guam, American Samoa, and the CNMI of Control            
                    Over Their Tax Systems                                            
               Guam, American Samoa, and the CNMI had a mirror or modified            
          mirror system of taxation for many years before 1986.  Under that           
          system, American Samoa, in 1963, adopted substantially all of the           
          Internal Revenue Code of 1954, 11 A.S.C.A. sec. 11.0501,6 but               
          American Samoans paid the tax to American Samoa, not the United             
          States.                                                                     




               5(...continued)                                                        
                    any specified possession, and                                     
                         (2) income effectively connected with                        
                    the conduct of a trade or business by such                        
                    individual within any specified possession.                       
                        *     *     *     *     *     *     *                         
                    (d) Special Rules.--For purposes of this section--                
                        *     *     *     *     *     *     *                         
                         (2) Determination of source, etc.--The                       
                    determination as to whether income is                             
                    described in paragraph (1) or (2) of                              
                    subsection (a) shall be made under                                
                    regulations prescribed by the Secretary.                          
                         (3) Determination of residency.--For                         
                    purposes of this section and section 876, the                     
                    determination of whether an individual is a                       
                    bona fide resident of Guam, American Samoa,                       
                    or the Northern Mariana Islands shall be made                     
                    under regulations prescribed by the                               
                    Secretary.                                                        
               6  See Boral Gas, Inc. v. Iaulualo, No. CA 87-1 (Am. Samoa             
          Oct. 3, 2002).                                                              





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