Rev. Rul. 60-38

The Internal Revenue Service has been requested to clarify the procedures outlined in Revenue Ruling 54-584, C.B. 1954-2, 212, and Revenue Procedure 57-13, C.B. 1957-1, 741, pertaining to the refund by an employer of the tax withheld, under section 1441 of the Internal Revenue Code of 1954, from a nonresident alien who is temporarily departing from the United States and who files Form 1040C, Departing Alien Income Tax Return.

Revenue Ruling 54-584 holds that the tax withheld from wages paid to a nonresident alien employee, under the provisions of section 143(b) of the Internal Revenue Code of 1939 (corresponding to section 1441 of the 1954 Code), which has not yet been paid to the District Director of Internal Revenue, may be refunded direct to such nonresident alien employee by his employer upon receipt of satisfactory evidence that the employee has filed an appropriate income tax return and paid the amount of tax, if any, due thereon without claiming credit for such tax withheld; or, the excess of the tax withheld over the amount due on the return may be refunded if the employee has not paid the amount of tax due.

The Revenue Ruling specifically states as follows:

In order for the nonresident alien employee to obtain the refund of the tax withheld under section 143(b) of the Code direct from his employer, he must:

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2. File the appropriate return (Form 1040B, United States Nonresident Alien Income Tax Return, or Form 1040C, United States Departing Alien Income Tax Return) together with the statement obtained from the employer with the appropriate District Director of Internal Revenue.

In Revenue Procedure 57-13, supra , section 3.02 states that the `appropriate income tax return' normally means Form 1040C, United States Departing Alien Income Tax Return.

Except as stated below, the provisions of Revenue Ruling 54-584, supra , are applicable when a return is filed on Form 1040C by a departing nonresident alien seeking a refund from an employer of the tax withheld from compensation for services under section 1441 of the 1954 Code. The procedure established in Revenue Ruling 54-584 and amplified by Revenue Procedure 57-13, supra , would also be followed when a return is filed on Form 1040B after the close of the taxable year by a nonresident alien who is not departing from the United States.

However, such procedure should not be followed where a return on Form 1040C is filed by a nonresident alien who is temporarily departing from the United States and may be returning to the United States within the taxable year which includes the period for which the Form 1040C is filed.

Revenue Ruling 54-584, supra , is hereby modified.