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Dimitry K., Esq.
Dimitry K., Esq., Attorney
Category: Legal
Satisfied Customers: 41221
Experience:  Multiple jurisdictions, specialize in business/contract disputes, estate creation and administration.
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I am a US citizen working for a US company overseas who have

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I am a US citizen working for a US company overseas who have not issued W2s or paid social security in the US because the company operates overseas. I am concerned about benefits, that i won't get any. Is it lawful for them to do this and can i bring a claim against my employer to remedy?

Thank you for your question. Please allow me to assist you and provide you with some basis of information before you decide whether or not you can bring a claim against your employer.

Typically as per IRS regulations:

When Social Security and Medicare Taxes Apply Outside Of U.S.

In general, U.S. social security and Medicare taxes continue to apply to wages for services you perform as an employee outside of the United States if one of the following applies:

  1. You are working for an American employer which includes:
    1. The U.S. Government or any of its instrumentalities
    2. An individual who is a resident of the United States
    3. A partnership of which at least two-thirds of the partners are U.S. residents
    4. A trust of which all the trustees are U.S. residents
    5. A corporation organized under the laws of the United States, any U.S. state, or the District of Columbia, Puerto Rico, the Virgin Islands, Guam, American Samoa, or the Commonwealth of the Northern Mariana Islands (with respect to the CNMI, refer to Revenue Ruling 80-167).
  2. You perform the services on or in connection with an American vessel or aircraft and either:
    1. You entered into your employment contract within the United States, or
    2. The vessel or aircraft touches at a U.S. port while you are employed on it
  3. You are working in one of the countries with which the United States has entered into a binational social security agreement (also known as Totalization Agreements), and the agreement provides that your foreign employment is subject to U.S. social security and Medicare taxes.
  4. You are working for a foreign affiliate of an American employer under a voluntary agreement entered into between the American employer and the U.S. Treasury Department


But likewise be aware that "f you are permanently working in a foreign country with which the United States has a social security agreement and, under the agreement, your pay is exempt from U.S. social security tax, you or your employer should get a statement from the authorized official or agency of the foreign country verifying that your pay is subject to social security coverage in that country.

If the authorities of the foreign country will not issue such a statement, either you or your employer should get a statement from the U.S. Social Security Administration, Office of International Programs, at the address below. The statement should indicate that your wages are not covered by the U.S. social security system.

This statement should be kept by your employer because it establishes that your pay is exempt from U.S. social security tax.

Only wages paid on or after the effective date of the totalization agreement can be exempt from U.S. social security tax.

Generally, under these agreements, you will only be subject to social security taxes in the country where you are working. However, if you are temporarily sent to work in a foreign country, and your pay would otherwise be subject to social security taxes in both the United States and that country, you generally can remain covered only by U.S. social security. You can get more information on any specific agreement by contacting the United States Social Security Administration. You can get more information from the Social Security International Program Web site.



If this is a purely international position and you pay taxes in the country where you work, then the lack of withholding is valid. Then there is no basis to bring a claim.


Good luck.

Customer: replied 4 years ago.

Thank you. No taxes are being paid in the country where i work. No social security. The country does not have a bi-national social security agreement /with the US.


I was sent to the country to work and now that i have brought up the social security question my employers have decided to close down and that means i will be out of a job and have to return to the US but i can't file for unemployment or benefits since no social security was being paid in either the US or in the overseas country.


Do i still have a claim or am i completely out of luck?



Thank you for your follow-up.

This is a tough position to be in. If this was purely international, I do see it as a situation where non-payment is not a violation, which would made you out of luck. However you could argue (potentially anyway) with the company and the IRS that this was a temporary position and that the employer was obligated to withhold taxes. I honestly do not know if you would prevail as this is very much based on whether the intent for the position was for it to be permanent or temporary, but it is a potential shot at trying to make the employer liable.

Good luck.

Customer: replied 4 years ago.

Thanks again, just a bit of clarification, what do you mean by "purely international"? Are you saying the company is NOT US (therefore international?) or are you saying if i was hired while i was outside the US by the company as opposed to being in the US and being assigned to the overseas US company.


Since the basis would be if it is purely international i need to know exactly what that means and whether or not it applies to my situation.


How can i tell if my situation is purely international or not?

By 'purely international' I mean that this was designed to be a permanent position and not a temporary one--that you were going to be based out of the country, not the US. This is not a legal term, it is a descriptive term based on how you were employed. In essence the less of a link you ahve to the US company, the weaker your claim may become.

Good luck.

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Customer: replied 4 years ago.

Thank you..just one more thing...i am the general manager of the overseas company, i only answer to our US headquarters in California, the board members there are the same board members on the local company, i can't do anything with out direct instruction from the board and the other officers of the company in the US.. Is this a weak link? How strong is this link?

That is still a fairly weak link, I am afraid--the reason is because you are still the general manager and can operate the company day-to-day yourself. Answering to headquarters makes it more akin to a subsidiary then a direct day-to-day link, and that likewise weakens the claim that this was anything but a permanent position. A temporary would akin to consulting who would appear for 3 days a week and then fly back, but a permanent position is one where you primarily work overseas, and then fly back either for meetings or for family, but not primarily as part of your job description.

Good luck.