Pinoy workers in CNMI start paying ‘unfair’ US taxes
Filipino workers in the Commonwealth of the Northern Mariana Islands have started paying U.S. Social Security and Medicare taxes amid workers’ longstanding concerns that they will not benefit from such taxes.
Most of these Filipino workers have started seeing these U.S. tax deductions on their payroll this week.
This means workers who are paid the new CNMI minimum wage of $6.05 an hour would have to pay nearly US$1,000 a year in Federal Insurance Contribution Act or FICA taxes alone.
For decades, workers from the Philippines have been exempted from paying FICA taxes, which cover Social Security and Medicare.
When CNMI immigration became under U.S. federal control in 2009, Filipino workers under the so-called transitional CNMI-only work or CW permits have also been required to pay FICA taxes but got a five-year reprieve that ended on Jan. 1, 2015.
However, FICA benefits are available only to those who have paid these taxes for at least 10 years, meaning Filipino workers who started paying for FICA taxes this year will not be able to benefit from it when their CNMI-only work permits expire in 2019.
Carlito Marquez, a Filipino engineer working in the CNMI for 19 years and recipient of a Ten Outstanding OFWs in Saipan award in 2001, said it is unfair that Filipino workers are now subject to FICA tax payments when they won’t see a single dime of such contributions once their work permits expire.
“First, I believe FICA is not applicable to all CWs just like H2 visa workers in Guam who I believe are exempted from FICA deductions. I feel uncomfortable with FICA deductions among CWs in the CNMI because the number of years of the maturity of FICA is less than the number of years of the validity of CW (permits). How can CWs benefit from it?” Marquez told GMA News.
The Internal Revenue Service, the U.S. government agency responsible for tax collection and enforcement, said, “[E]mployers must withhold and pay FICA taxes on remuneration paid to residents of the Philippines who do not hold an H-2 status for services performed as employees in the CNMI after Dec. 31, 2014, unless these workers are eligible for FICA exemption based on some circumstances other than the exemption in section 3121(b)(18).”
Workers from China and Korea, among other foreign workers in the CNMI, have been paying FICA taxes.
Employers in the CNMI are also wary of the FICA tax payments among Filipino workers.
The Saipan Chamber of Commerce, for example, said it is “unfair” and “improper” for the U.S. government to “collect taxes from foreign workers who will not benefit from these taxes and are not provided permanent immigration status.”
Marquez, who hails from Sipocot, Camarines Sur and a former president of the Bicol Association in the Northern Mariana Islands, said FICA tax deductions are just one of the many issues facing Filipino workers with CW permits, along with some employers’ late filing of their CW permit renewals and an end to mandatory health insurance coverage provided by employers. —KBK, GMA News
Most of these Filipino workers have started seeing these U.S. tax deductions on their payroll this week.
This means workers who are paid the new CNMI minimum wage of $6.05 an hour would have to pay nearly US$1,000 a year in Federal Insurance Contribution Act or FICA taxes alone.
For decades, workers from the Philippines have been exempted from paying FICA taxes, which cover Social Security and Medicare.
When CNMI immigration became under U.S. federal control in 2009, Filipino workers under the so-called transitional CNMI-only work or CW permits have also been required to pay FICA taxes but got a five-year reprieve that ended on Jan. 1, 2015.
However, FICA benefits are available only to those who have paid these taxes for at least 10 years, meaning Filipino workers who started paying for FICA taxes this year will not be able to benefit from it when their CNMI-only work permits expire in 2019.
Carlito Marquez, a Filipino engineer working in the CNMI for 19 years and recipient of a Ten Outstanding OFWs in Saipan award in 2001, said it is unfair that Filipino workers are now subject to FICA tax payments when they won’t see a single dime of such contributions once their work permits expire.
“First, I believe FICA is not applicable to all CWs just like H2 visa workers in Guam who I believe are exempted from FICA deductions. I feel uncomfortable with FICA deductions among CWs in the CNMI because the number of years of the maturity of FICA is less than the number of years of the validity of CW (permits). How can CWs benefit from it?” Marquez told GMA News.
The Internal Revenue Service, the U.S. government agency responsible for tax collection and enforcement, said, “[E]mployers must withhold and pay FICA taxes on remuneration paid to residents of the Philippines who do not hold an H-2 status for services performed as employees in the CNMI after Dec. 31, 2014, unless these workers are eligible for FICA exemption based on some circumstances other than the exemption in section 3121(b)(18).”
Workers from China and Korea, among other foreign workers in the CNMI, have been paying FICA taxes.
Employers in the CNMI are also wary of the FICA tax payments among Filipino workers.
The Saipan Chamber of Commerce, for example, said it is “unfair” and “improper” for the U.S. government to “collect taxes from foreign workers who will not benefit from these taxes and are not provided permanent immigration status.”
Marquez, who hails from Sipocot, Camarines Sur and a former president of the Bicol Association in the Northern Mariana Islands, said FICA tax deductions are just one of the many issues facing Filipino workers with CW permits, along with some employers’ late filing of their CW permit renewals and an end to mandatory health insurance coverage provided by employers. —KBK, GMA News
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