[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)(C)-1]

[Page 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)(C)-1  Remuneration for services performed in Puerto 
Rico by citizen of the United States.

    (a) Remuneration paid for services performed within Puerto Rico for 
an employer (other than the United States or any agency thereof) by a 
citizen of the United States does not constitute wages and hence is not 
subject to withholding, if it is reasonable to believe that during the 
entire calendar year the employee will be a bona fide resident of Puerto 
Rico. The reasonable belief contemplated by section 3401(a)(8)(C) 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 the 
employee was a bona fide resident of Puerto Rico for the entire calendar 
year.
    (b) The employer may, in the absence of cause for a reasonable 
belief to the contrary, presume that an employee will be a bona fide 
resident of Puerto Rico during the entire calendar year.
    (1) Unless the employee is known by the employer to have maintained 
his abode at a place outside Puerto Rico at some time during the current 
or the preceding calendar year; or
    (2) In any case where the employee files with the employer a 
statement (containing a declaration under the penalties of perjury that 
such statement is true to the best of the employee's knowledge and 
belief) that such employee has at all times during the current calendar 
year been a bona fide resident of Puerto Rico and that he intends to 
remain a bona fide resident of Puerto Rico during the entire remaining 
portion of such current calendar year.
    (c) This section has no application to remuneration paid to a 
citizen of the United States for services performed in Puerto Rico as an 
employee of the United States or any agency thereof.