Briefing is underway in an appeal by two taxpayers—a married couple with dual citizenship in the United States and France—of a U.S. Tax Court decision denying them foreign tax credits for money they contributed to social security payments to France. (Eshel v. Commissioner, D.C. Cir., No. 14-01215).
Ory and Linda Eshel worked and lived in France during the 2008 and 2009 tax years and paid French taxes, including income tax, unemployment tax, and the two taxes in dispute, "la contribution sociale generalisee" (CSG) and "la contribution pour le remboursement de la dette sociale" (CRDS). As U.S. citizens, the Eshels also filed federal tax returns for those years and claimed credits under tax code Section 901 for all the French taxes they paid. The Internal Revenue Service allowed credits for the income and unemployment tax payments, but disallowed the CSG and CRDS payments.
The decision being appealed was issued on April 2, 2014, by Judge Albert G. Lauber of the U.S. Tax Court. In that decision, Judge Lauber affirmed the IRS's disallowance of the credits and found that CSG and CRDS were amendments to France's social security laws, and therefore encompassed in a 1987 totalization agreement between France and the United States, and eligibility for foreign tax credits was precluded under Section 317(b)(4) of the Social Security Amendments of 1977 (SSA) (64 DTR K-2, 4/3/14).
At issue on appeal is the scope of the 1987 U.S.-France totalization agreement and its interplay with foreign tax credit rules and social security taxes. The Eshels filed their appellant brief on February 18, 2015, the IRS filed its appellee brief on April 16, 2015, and this week the Eshels filed a motion to extend the time to file their reply brief to May 14, 2015.
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