Persons Employed by a Foreign Government or International Organization - FICA
Services for Foreign Government
Compensation for services performed as an employee of a foreign government, without regard to citizenship, residence, or where services are performed, is not considered to be wages for Social Security and Medicare tax purposes. This includes services performed by ambassadors, other diplomatic and consular officers and employees, and nondiplomatic representatives.
Compensation for services performed as an employee of a wholly owned instrumentality of a foreign government, without regard to citizenship, residence, or where services are performed is not considered to be wages for Social Security and Medicare tax purposes if:
- The instrumentality is wholly owned by the foreign government;
- The services are of a character similar to those performed in foreign countries by employees of the United States Government or of an instrumentality thereof; and
- The Secretary of States certifies to the Secretary of the Treasury that the foreign government, with respect to whose instrumentality exemption is claimed, grants an equivalent exemption with respect to services performed in the foreign country by employees of the United States Government and of instrumentalities thereof.
U.S. citizens and resident aliens paid for services rendered to a foreign government or international organization should refer to How to Report Wage Income Paid by Foreign Governments or International Organizations for Work Performed in the United States for instructions on how to file their U.S. federal individual income tax returns.
Services for International Organization
Compensation for services performed within or outside the United States by an employee or officer (regardless of citizenship or residence) of an international organization is not considered to be wages for Social Security and Medicare tax purposes. For U.S. citizens the income paid for services rendered to an international organization is reportable as self-employment income on their U.S. federal income tax returns, and is subject to self-employment tax to the extent such services are performed within the United States.
Compensation for services performed in the employ of an international organization by an individual pursuant to a transfer of such individual to such international organization pursuant to section 3582 of title 5, United States Code, dealing with Government Organization and Employees, shall constitute wages for Social Security / Medicare Tax purposes if:
- Immediately before such transfer, such individual performed service with a Federal agency whose wages were subject to Social Security and Medicare taxes, and
- Such individual would be entitled, upon separation from such international organization and proper application, to reemployment with such Federal agency under section 3582.
The term "international organization" means a public international organization entitled to enjoy privileges, exemptions, and immunities as an international organization under the International Organizations Immunities Act (22 U.S.C. 288-288f).
Section 1 of the International Organizations Immunities Act provides as follows:
Sec. 1. [International Organizations Immunities Act.] For the purposes of this title [International Organizations Immunities Act], the term "international organization" means a public international organization in which the United States participates pursuant to any treaty or under the authority of any Act of Congress authorizing such participation or making an appropriation for such participation, and which shall have been designated by the President through appropriate Executive order as being entitled to enjoy the privileges, exemptions, and immunities herein provided. The President shall be authorized, in the light of the functions performed by any such international organization, by appropriate Executive order to withhold or withdraw from any such organization or its officers or employees any of the privileges, exemptions, and immunities provided for in this title (including the amendments made by this title) or to condition or limit the enjoyment by any such organization or its officers or employees of any such privilege, exemption, or immunity. The President shall be authorized, if in his judgment such action should be justified by reason of the abuse by an international organization or its officers and employees of the privileges, exemptions, and immunities herein provided or for any other reason, at any time to revoke the designation of any international organization under this section, whereupon the international organization in question shall cease to be classed as an international organization for the purposes of this title. [Income Tax Reg. §31.3306(c)(16)-1.]
- Social Security Tax / Medicare Tax and Self-Employment
- Internal Revenue Code Section 3121(b)(11), (b)(12), and (b)(15)
- Income Tax Regulations 31.3121(b)(11)-1; 31.3121(b)(12)-1; and 31.3121(b)(15)-1.
- Internal Revenue Code Section 3121(y)
- Internal Revenue Code Section 1402 (c)(2)(C)
- Service Center Advice SCA 199932003, August 13, 1999
- Field Service Advice 2000 FSA LEXIS 239, REFERENCE: CC:EBEO:TR-45-2115-95, Br2:AGKelley, September 29, 2000
Note: This page contains one or more references to the Internal Revenue Code (IRC), Treasury Regulations, court cases, or other official tax guidance. References to these legal authorities are included for the convenience of those who would like to read the technical reference material. To access the applicable IRC sections, Treasury Regulations, or other official tax guidance, visit the Tax Code, Regulations, and Official Guidance page. To access any Tax Court case opinions issued after September 24, 1995, visit the Opinions Search page of the United States Tax Court.