[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)(8)(B)-1]

[Page 204-205]
 
                       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)(8)(B)-1  Remuneration for services performed in 

possession of the United States (other than Puerto Rico) by citizen 
of the United States.

    (a) Remuneration paid for services for an employer (other than the 
United States or any agency thereof) performed by a citizen of the 
United States within a possession of the United States (other than 
Puerto Rico) does not constitute wages and hence is not subject to 
withholding, if it is reasonable to believe that at least 80 percent of 
the remuneration to be paid to the employee by such employer during the 
calendar year will be for such services. The reasonable belief 
contemplated by section 3401(a)(8)(B) may be based upon any evidence 
reasonably sufficient to induce such belief, even though such evidence 
may be insufficient upon closer examination by the district director or 
the courts finally to establish that at least 80 percent of the 
remuneration paid by the employer to the employee during the calendar 
year was for services performed within such a possession of the United 
States.

[[Page 205]]

    (b) This section has no application to remuneration paid to a 
citizen of the United States for services performed in any possession of 
the United States as an employee of the United States or any agency 
thereof.
    (c) For provisions relating to remuneration for services performed 
by a permanent resident of the Virgin Islands, see paragraph (b)(12) of 
Sec. 31.3401(a)-1.