The regulations say "Sections 861(b) and 863(a) state in general terms how to determine taxable income of a taxpayer from sources within the United States" [in 26 CFR §1.861-8(a)(1)], and "The taxpayer's taxable income from sources within or without the United States will be determined under the rules of Secs. 1.861-8 through 1.861-14T for determining taxable income from sources within the United States." [in 26 CFR §1.863-1(c)]
I don't see anything about "non-US citizens living outside the United States" there, and I always thought that I was a "taxpayer" under the law, so I'd honestly appreciate it if someone could point me to the section of the US code or regulations that does say that.
Thanks in advance!
Sec. 861. - Income from sources within the United States
(a) Gross income from sources within United States
The following items of gross income shall be treated as income from sources within the United States:
(1) Interest
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(2) Dividends
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(3) Personal services
Compensation for labor or personal services performed in the United States; except that compensation for labor or services performed in the United States shall not be deemed to be income from sources within the United States if -
(A)
the labor or services are performed by a nonresident alien individual temporarily present in the United States for a period or periods not exceeding a total of 90 days during the taxable year,
(B)
such compensation does not exceed $3,000 in the aggregate, and
(C)
the compensation is for labor or services performed as an employee of or under a contract with -
(i)
a nonresident alien, foreign partnership, or foreign corporation, not engaged in trade or business within the United States, or
(ii)
an individual who is a citizen or resident of the United States, a domestic partnership, or a domestic corporation, if such labor or services are performed for an office or place of business maintained in a foreign country or in a possession of the United States by such individual, partnership, or corporation.
In addition, compensation for labor or services performed in the United States shall not be deemed to be income from sources within the United States if the labor or services are performed by a nonresident alien individual in connection with the individual's temporary presence in the United States as a regular member of the crew of a foreign vessel engaged in transportation between the United States and a foreign country or a possession of the United States.
What none of this tells you is the purpose of this definition, which is to conform taxation of foreign entities to treaty obligations:
Sec. 4948. - Application of taxes and denial of exemption with respect to certain foreign organizations
(a) Tax on income of certain foreign organizations
In lieu of the tax imposed by section 4940, there is hereby imposed for each taxable year on the gross investment income (within the meaning of section 4940(c)(2)) derived from sources within the United States (within the meaning of section 861) by every foreign organization which is a private foundation for the taxable year a tax equal to 4 percent of such income.
In a related citation:
CONFORMITY OF AMENDMENTS MADE BY FOREIGN INVESTORS TAX ACT OF 1966 WITH TREATY OBLIGATIONS OF THE UNITED STATES
Section 110 of title I of Pub. L. 89-809 provided that: ''No amendment made by this title (see Short Title note above) shall apply in any case where its application would be contrary to any treaty obligation of the United States. For purposes of the preceding sentence, the extension of a benefit provided by any amendment made by this title shall not be deemed to be contrary to a treaty obligation of the United States.''