The IRS will no longer challenge foreign tax credits for the French Contribution Sociale Généralisée (CSG) and Contribution au Remboursement de la Dette Sociale (CRDS) on the basis that these taxes are not social taxes covered by the France-U.S. Totalization agreement, and taxpayers may be able to request a refund if they claim a foreign tax credit for such taxes paid in the last 10 years.
Generally, the United States disallows a credit for social security taxes paid or accrued to a foreign country with which the United States has a social security agreement; i.e., a totalization agreement. However, the United States and France recently memorialized through diplomatic communications an understanding that the CSG and the CRDS are not social taxes covered by the agreement.
According to the IRS statement, “Taxpayers have 10 years to file for U.S. tax refunds claims 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.”
U.S. taxpayers who have paid the CSG or CRDS in the past 10 years should consult with their tax advisers in order to determine if they are eligible for a refund, and consider whether it is worth amending prior year US tax returns.
The IRS indicated that they would provide additional information in regards to claiming these foreign tax credits soon.
