The following information regarding tax issues is meant to provide general guidance only. Tax law is constantly changing and is subject to interpretation. For more specific and up-dated information, you should contact the IRS, a tax accountant, or a tax attorney.

I. LEGAL AND PAYROLL ISSUES

ICCP camp staff are exchange visitors to the United States, participating in an Exchange Visitor Program designated by the U.S. Department of State on March 2, 1960. They have been admitted under Section 101 [a] [15] [J] of the Immigration and Nationality Act, as evidenced by the J-1 visa in their passport. The work authorization is valid from June 1 through October 1. They are placed by ICCP at a specific camp and are not authorized to do any other type of work. They must leave the United States at the end of the visa period.

The tax law considers participants as non-resident alien employees of the camp where they have been placed.

II. IDENTITY AND ELIGIBILITY TO WORK

Immigration law requires employers to verify that all employees (both U.S. citizens and aliens) meet certain requirements. Within three days of the new employee starting work, you must fill out a I-9 Federal Government form on each employee hired. You must retain these forms for three years. For international staff on an Exchange Visitor Visa, you will ask to see the following forms which participants have in their possession: to prove identity - exchangee's passport (pages listing vital statistics and J-1 visa stamp) to prove work a. pink copy of DS-2019 form which allowed eligibility exchangee to apply for J-1 visa

b. white I-94 form stapled into passport - gives J-visa status and authorized length of stay. In Section I of the form, check the third box and indicate the dates as listed in Section 3 of the Form DS-2019. Indicate the number printed on the Form I-94. You and the participant sign the form. You should make photocopies.

III. TAX STATUS    

A. Taxpayer Identification Numbers

All nonresident aliens participating in the YMCA's exchange visitor's programs must apply for U.S. Taxpayer Identification Numbers (TIN) at the nearest Social Security Office. However, because the IRS requires that a Form W-4 Employee's Withholding Allowance Certificate be completed upon starting employment, and the ICCP camp staff may not yet have a TIN, the words "nonresident alien" may be filled in on the W-4 form in the place of the social security number. Should the ICCP camp staff not yet have received a TIN before the end of camp, the words "nonresident alien" should continue to be used on all tax reporting forms.

B. Social Security and Federal Unemployment Withholding

All nonresident alien J-1 visa program participants are exempt from both FICA and FUTA taxes. The IRS does not have a form for use in claiming these exemptions. Employers should attach a statement to both their Form 940 (FICA tax return) and Form 941 (FUTA tax return) stating that the participants are not subject to FICA or FUTA withholding due to their J-1 visa status.

C. Federal Income Tax Withholding

(The following information is valid only for international summer camp staff participating on ICCP's four month J-1 visa program. Other tax rules apply for participants on longer YMCA exchange visitor programs.)

Employers must require all ICCP participants to complete IRS Form W-4. International staff in the United States on a J-1 visa must check "Single" in box 3 of the Form W-4 regardless of their actual marital status. Likewise, they may only claim one withholding allowance on line 5 (except participants from Canada, Mexico, American Samoa, Korea, Japan, or India who may claim additional personal exemptions due to tax treaties).

In this case the withholding amount will be $0.

However, the IRS has added a complication. IRS publication 515 instructs employers to withhold $7.60/week because the J-1 visa program participant may not claim the standard deduction on the U.S. income tax return. Most ICCP participants will get this $7.60/week back after they file a U.S. Tax Return.

Many camp directors have asked whether they really need to withhold this additional $7.60/week. This requirement appears only in IRS Publication 515 and in no other place in the Internal Revenue Code or the Treasury regulations. Employers do not have to withhold tax if they can show it has already been paid elsewhere. Camps electing not to withhold the additional $7.60/week should keep careful records showing the ICCP participant will not receive compensation in the United States in excess of the amount of the personal exemption they may claim. For 1995 this amount is $6.85 times the total number of days the participant will be in the United States during the calendar year. As with all records relating to taxes, this information should be kept for three years.

If you are unsure whether the international staff will earn more than the personal exemption amount of $6.85/day for each day they are in the United States during 1995 or you are unsure of how many days the international staff will actually be in the country, withhold the $7.60/week.

For tax purposes, a participant's taxable income includes all pocket money, wages, and stipends. It does not include: value of meals and lodging provided by the employer during the time of employment, travel expenses for business purposes, or value of employer-provided health and accident insurance.

D. International Treaties Effecting Withholding Taxes

Some ICCP participants are from countries which have negotiated agreements with the United States exempting income earned here from U.S. taxes. A participant wishing to claim exemption from U.S. Federal withholding tax must give the employer an IRS Form 8233 detailing the tax treaty under which he or she is claiming this exemption. The employer does not honor this exemption until Form 8233 and the claim is verified by the employer. IRS Publication 901 discusses tax exemptions provided by international treaties.

IV. U.S. TAX REPORTING

Required Furnishing of W-2 Form

As employers who are paying "remuneration for services performed by an employee," you are required to issue a form W-2 to each employee, including each nonresident alien employee. Employers      are subject to a penalty if they fail to do so.