Senate Floor Leader Pete Reyes (IR Saipan) said the U.S. Internal Revenue Service’s decision to waive collection of Federal Insurance Contribution Act or FICA taxes on wages from Filipinos working in the CNMI gives justice to the temporary workers and also the employers.
In an interview on Friday, Reyes said he is glad that IRS made such a decision because the Filipino workers are not entitled to benefits especially if some of them are just working for two years.
“They do not meet the threshold of 40 quarters. They technically lose that until and even if they reach 65, they are not entitled to receive any benefits,” the senator pointed out.
FICA covers Social Security and Medicare taxes.
In its Dec. 17 announcement, IRS said Filipinos working in the CNMI need not pay federal taxes between now and Dec. 31, 2014.
IRS, however, stated that employers must withhold and pay FICA taxes on wages paid to Filipino workers who do not hold H-2 status in the CNMI “after Dec. 31, 2014”—the end of the immigration transition period.
Reyes said FICA collection is a heavy burden on the employers especially at a time of economic hardship.
“Employers need to survive. So this is a welcome resolve and it’s a good Christmas gift to the workers and the employers alike,” he said.
The senator said the FICA money collected if spent instead in the Commonwealth, would stimulate the economy because of the multiplier effect.
Asked if IRS should reimburse the workers and the employers, Reyes said he does not know how IRS is going to treat those that have paid.
“I know that the ruling that was made prospectively is going to waive the FICA collection. Retrospectively, I don’t know. It’s a federal thing. So I don’t think that I should comment on anything that is not within our power or control,” he added.