The Secretary of State to the French Ambassador ( Laboulaye )

The Secretary of State presents his compliments to His Excellency the Ambassador of the French Republic, and has the honor to submit to His Excellency a portion of a report received from the Treasury Department regarding the taxes levied upon profits made in the United States since 1929 by non-resident foreigners, which was the subject of His Excellency’s inquiry in the note of January 15, 1935.

“The note reflects the existence of an impression that in taxing income of non-resident aliens, the United States is adopting a new fiscal policy, but actually the policy is of comparatively long standing. The [Page 485] Act of October 3, 1913,5 imposed a tax upon certain income derived from sources within the United States by non-resident alien individuals and foreign corporations, and all subsequent Revenue Acts have contained provisions rendering such individuals and corporations liable to income taxes upon income realized within the United States. Due to recent vigorous efforts to obtain information concerning gains derived by these taxpayers, a misapprehension as to the novelty of the matter has occurred in a number of instances.

“Protests have been made previously against the vigorous enforcement of the provisions of statutes taxing income realized by nonresident aliens and foreign corporations from sources within the United States, and since the objections raised suggest that vital questions of international commerce may be involved, all phases of taxation of foreign individuals and corporations are being made the subject of careful study. As soon as a definite conclusion has been reached, you will be immediately advised.”

  1. 38 Stat. 113.