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U.S. Taxpayers Now Can Claim Foreign Tax Credits for Foreign Taxes Assessed on French Contribution Sociale Generalisee and Remboursement de la Dette Sociate

U.S. Taxpayers Now Can Claim Foreign Tax Credits for Foreign Taxes Assessed on French Contribution Sociale Generalisee and Remboursement de la Dette Sociate

Recently, the United States and France memorialized through diplomatic communications an understanding that the French Contribution Sociale Generalisee (“CSG”) and Contribution a Remboursement de la Dette Sociate (“CRDS”) taxes are not social security taxes covered by the totalization agreement between the United States and France. Accordingly, the Internal Revenue Service (“IRS”) will not challenge foreign tax credits for CSG and CRDS payments on the basis that the agreement on social security applies to those taxes.

The IRS’s change in policy means that U.S. individual taxpayers who paid or accrued these taxes but did not claim them, can file amended returns with the IRS to claim a foreign tax credit. Claiming a foreign tax credit not previously taken on a tax return can result in a tax refund. Generally, individual taxpayers have ten years to file a claim for refund of federal income taxes paid associated with tax credits for CSG and CRDS. The 10-year period begins the day after the regular due dates for the filing the tax return (without extensions) for the year in which the foreign taxes were paid or accrued. Individuals claiming foreign tax credits for CSG and CRDS retirement income should write “French CSG/CRDS Taxes” in red at the top of Forms 1040-X and file them with the IRS with accompanying Forms 1116.

Anthony Diosdi is one of several tax attorneys and international tax attorneys at Diosdi & Liu, LLP. As a domestic and international tax attorney, Anthony Diosdi provides international tax advice to individuals, closely held entities, and publicly traded corporations. Diosdi & Liu, LLP has offices in San Francisco, California, Pleasanton, California and Fort Lauderdale, Florida. Anthony Diosdi advises clients in international tax matters throughout the United States. Anthony Diosdi may be reached at (415) 318-3990 or by email: adiosdi@sftaxcounsel.com

This article is not legal or tax advice. If you are in need of legal or tax advice, you should immediately consult a licensed attorney.

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