Fitial told reporters yesterday that he wanted a clarification from the federal government because there “should not be two policies for the same type of subject.”
He noted that Filipino and Korean guest workers on Guam are exempted “so why would Filipino and Korean workers here pay?” That’s discriminatory, he added.
In his letter to IRS chief counsel William J. Wilkens, the governor said the imposition of FICA on CNMI guest workers “is contrary to the long-standing U.S. tax policy and would have significant impact upon our community.”
In her letter a few weeks ago, Lynn Camillo, IRS employment tax branch chief, said Filipino guest workers are not eligible for FICA exemption because they do not hold an H-2 visa, which may be extended up to three years.
To qualify for FICA benefits, a worker must have at least 10 years of service, the administration earlier stated.
Under the federalization law, CNMI guest workers may be petitioned for a CW visa which will be phased out in 2014.
Fitial asked Wilkens to meet with him and Congressman Gregorio Kilili Camacho Sablan “to discuss this matter.”
The imposition of FICA taxes on Filipino and Korean workers in the CNMI, Fitial said, “will unnecessarily increase the applicable tax rate paid by employers by 7.65 percent and on employees by 7.65 percent, totaling 15.3 percent.”
Press Secretary Angel A. Demapan said the administration finds the new policy to be “inappropriate because it is discriminatory.”
