U.S. - France Agree CSG and CRDS Are Eligible for FTC
The United States and the French Republic recently memorialized through diplomatic communications an understanding that the French Contribution Sociale Generalisee (CSG) and Contribution au Remboursement de la Dette Sociate (CRDS) taxes are not social taxes covered by the Agreement on Social Security (i.e. Totalization Agreement) between the two countries.
Accordingly, the 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. For certain U.S. taxpayers, this could mean they are eligible to claim a larger foreign tax credit on their U.S. income tax return. They may also be eligible to receive a refund of U.S. income tax by filing an amended U.S. personal income tax return income tax for prior years.
Taxpayers have 10 years to file a claim for refund of U.S. tax with respect to a foreign tax credit. The 10-year period begins the day after the regular due date for filing the return (without extensions) for the year to which the foreign taxes relate. The IRS will update information on claiming these taxes as foreign tax credits soon.
The foreign tax credit computation is complex. U.S. taxpayers who are subject to CSG and CRDS taxes should discuss this development with their tax advisors.
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