Totalization Agreements: International Social Security Tax Compliance

Looking ahead to retirement, an employee who meets one country’s basic social security eligibility requirements may receive benefits from that country. For example, a U.S. citizen will become qualified for U.S. social security benefits after earning forty credits (10 years total of work). If an employee or self-employed individual works long enough to meet the basic social security requirements of the U.S. and a foreign country, the employee may receive benefits from both countries, although benefits earned may be correspondingly reduced to prevent a windfall. What happens, however, when an employee or self-employed individual does not meet the basic social security requirements of any country because his or her time has been divided between working in the U.S. and working abroad? 

“Millionaire” Employment Tax: Could This Be Your Nonprofit?

How much is too much compensation for nonprofit executives? Many nonprofits face the opposite challenge, with below-market pay provided to key leaders who are willing to make financial sacrifices.  A new tax law nonetheless aims to curb abuses of Section 501(c)(3) organizations offering either very high salaries or too generous severance pay upon departure. The penalty?  A 21% excise tax on the amount deemed to be excessive compensation. Nonprofits thus may continue with such compensation largesse, but only if they pay Uncle Sam too. 

Oral Argument Heard: For and Against the Clergy Housing Allowance

On October 24, 2018, a three-judge panel of the federal Seventh Circuit Court of Appeals heard oral arguments in Gaylor v. Mnuchin, a tax case brought by the Freedom From Religion Foundation (FFRF) and its individual leaders challenging the constitutionality of tax exemption for the venerable clergy housing allowance. Attorneys from the U.S. Department of Justice (DOJ) for U.S. Treasury Secretary and the IRS Commissioner, as well as a group of religious intervenors, urged the court to uphold the exemption and defended its basis in the Constitution and related religious liberty jurisprudence. Attorneys for FFRF and a group of opposing tax professors contended that the allowance favors religion in violation of the First Amendment.