[Code of Federal Regulations]
[Title 26, Volume 15]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR31.3401(a)(7)-1]

[Page 201-202]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 31_EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT SOURCE--Table of Contents
 
              Subpart E_Collection of Income Tax at Source
 
Sec. 31.3401(a)(7)-1  Remuneration paid before January 1, 1967, for 

services performed by nonresident alien individuals who are residents 
of a contiguous country and who enter and leave the United States at 
frequent intervals.

    (a) Transportation service. Remuneration paid to nonresident aliens 
who are residents of a contiguous country (Canada or Mexico) and who, in 
the performance of their duties in transportation service between points 
in the United States and points in a contiguous country, enter and leave 
the United States at frequent intervals, is excepted from wages and 
hence is not subject to withholding. This exception applies to personnel 
engaged in railroad, bus, ferry, steamboat, and aircraft services and 
applies whether the

[[Page 202]]

employer is a domestic or foreign entity. Thus, the remuneration of a 
nonresident alien individual who is a resident of Canada and an employee 
of a domestic railroad, for services as a member of the crew of a train 
operating between points in Canada and points in the United States, is 
not subject to withholding under section 3402.
    (b) Service on international projects. Remuneration paid to 
nonresident aliens who are residents of a contiguous country (Canada or 
Mexico) and who, in the performance of their duties in connection with 
the construction, maintenance or operation of a waterway, viaduct, dam, 
or bridge traversed by or traversing the boundary between the United 
States and Canada or the boundary between the United States and Mexico, 
as the case may be, enter and leave the United States at frequent 
intervals, is excepted from wages and hence is not subject to 
withholding. Thus, the remuneration of a nonresident alien individual 
who is a resident of Canada, for services as an employee in connection 
with the construction, maintenance, or operation of the Saint Lawrence 
Seaway and who, in the performance of such services, enters and leaves 
the United States at frequent intervals, is not subject to withholding 
under section 3402.
    (c) Limitation on application of section. The exception provided by 
this section has no application to the remuneration of a resident of 
Canada or of Mexico who is employed wholly within the United States as, 
for example, where such a resident is employed to perform service at a 
fixed point or points in the United States, such as a factory, store, 
office, or designated area or areas within the United States, and who 
commutes from his home in Canada or Mexico in the pursuit of his 
employment within the United States.
    (d) Certificate required. In order for the exception to apply, the 
nonresident alien employee must furnish his employer a statement setting 
forth the employee's name and address and certifying (1) that he is not 
a citizen of the United States, (2) that he is a resident of Canada or 
Mexico, as the case may be, and (3) the approximate period of time 
during which he has had such status. Such statement shall be dated, 
shall be signed by the employee, and shall contain, or be verified by, a 
written declaration that it is made under the penalties of perjury. No 
particular form is prescribed for this statement.
    (e) Effective date. This section shall not apply with respect to 
remuneration paid after December 31, 1966. For rules with respect to 
such remuneration see Sec. 31.3401(a)(6)-1.

[T.D. 6516, 25 FR 13032, Dec. 20, 1960, as amended by T.D. 6908, 31 FR 
16776, Dec. 31, 1966]