MAHAL wants audience with IRS on FICA

Marianas Advocates for Humanitarian Affairs, Ltd. founder and president Rene Reyes wants an audience with the Internal Revenue Service regarding the reimplementation of Social Security and Medicare taxes on Filipino nonresident workers.

“MAHAL is calling for an immediate review and action by our leaders here in the CNMI to halt the implementation of FICA deductions on Filipino CW workers. The organization is also asking to have an audience with the IRS,” said Reyes.

Filipino CNMI-only workers, or CW workers, started paying Social Security and Medicare taxes under the Federal Insurance Contribution Act or FICA last Jan. 1, 2015.

Filipino workers in the Commonwealth used to pay the FICA taxes from late 2011 to 2012 until IRS issued a decision not to assert these taxes. Filipino workers received refunds on the FICA taxes they paid.

The one-time exemption effectively ended last Dec. 31, 2014, to the disappointment of a majority of Filipino nonresident workers, who now have to contribute 7.65 percent of their salary per pay period on FICA taxes.

“Being one of the advocates for Filipino workers here on Saipan, I believe FICA deductions shouldn’t be implemented on Filipino CWs, especially to those who have no U.S. citizen children,” said Reyes.

He went on to enumerate four reasons why the FICA deductions should stop:

The CW transition will end on 2019 and under the law CW workers would have to go home to their country of origin.

CW workers who have no U.S. citizen children have no chance of getting back their FICA contributions because you have to contribute 10 years before you can avail of the social security and retirement benefit.

For most Filipino CWs in the CNMI, a 7.65-percent deduction is a big thing and would lead them to spend less on food for their families.

It’s also hard for small- to medium-sized companies that are staffed by CW workers because the company share for FICA is an additional cost.

Reyes said the 7.65 percent is equivalent to $37 per payday for a minimum wage worker earning $6.05 per hour. That amount is enough to buy a 50-lb bag of rice or a month’s utilities payment.

The MAHAL president said struggling companies would also have no choice but to let go of some of their CW workers because they couldn’t afford to match the FICA contributions.

“We are encouraging all CW holders to have a voice and show solidarity. We know that the concerned agency will listen and understand our call. We are also calling for Congressman [Delegate Gregorio] Kilili [C.] Sablan, the new Congress, and the new government to assist us on this,” said Reyes.

Retired educator Fe Calixterio blasted the U.S. government for again deciding to lift the exemption of Filipino CWs from paying FICA taxes.

“It’s not fair. You have to pay 10 years before you are even able to collect. These CWs will not stay here after 2019. Who is so heartless to impose a fee on somebody who don’t expect anything in return?” said the retired ABE director and GED administrator of the Northern Marianas College.

Calixterio suggested that if the CNMI government can get billions of dollars from an investor like Best Sunshine International Ltd., why not court other business entities to again invest on the islands instead of taking money away from CW workers.

“Is the U.S. so heartless and not concerned anymore? If they can bring big investments like Best Sunshine, they should just bring more of these investments to get money.”

Calixterio, a U.S. citizen since 1976, said she plans to visit Delegate Sablan’s office when the four-term congressman returns to the island.

“It’s a burden not only to employees but also to employers. What can they expect in return? Nothing. Zero. Somebody thought this was crazy to do then when this was first implemented in 2011.Now it’s coming up again. Please be fair. Justice for all is actually the basis of the U.S. government. Let’s be fair to CWs and those not staying here after 2019.”

Human rights activist and former Rota teacher Wendy Doromal said it’s simply unjust for the federal government to continue deducting FICA taxes on individuals who would not benefit from the program.

“I do not believe that any temporary nonresident worker should be paying FICA taxes regardless of nationality. Since nonresident workers are renewed year-to-year, and there is no pathway to citizenship in the current CNMI-Only Transitional Worker Program, there is no guarantee that they will be in the U.S. long enough to qualify to receive the benefits,” she said in an email to Saipan Tribune.

Doromal said a worker would have to work for 40 quarters—10 years—to be eligible to receive Social Security benefits.

“It is wrong to deduct 7.65 percent (6.2 percent for Social Security and 1.45 percent for Medicare) from the employee’s earnings each pay period when the employee’s immigration status is not permanent. Already the nonresidents workers in the CNMI earn poverty wages, with the CNMI federal minimum wage being a mere $6.05 an hour. Why should any temporary nonresident employee pay into this system? I imagine the affected CNMI employers are not pleased about having to pay the 7.65 percent matching tax either.”

Prior to Nov. 28, 2011, Filipino workers were considered exempt from paying these taxes. The CNMI remained on a wait-and-see mode, trying to get clarification from IRS regarding the application of FICA taxes as a result of federalization of local immigration.

Workers from China and Korea, among other foreign workers in the CNMI, have been paying FICA taxes.