Rev. Rul. 81-39

1981-1 C.B. 396, 1981-5 I.R.B. 14.

                       Internal Revenue Service
                                 Revenue Ruling

                       SOCIAL SECURITY TAXES; SWITZERLAND

                          Published: February 2, 1981

SECTION 901.--TAXES OF FOREIGN COUNTRIES AND OF POSSESSIONS OF UNITED STATES, 26 CFR 1.901-1: Allowance of credit for taxes

(Also Section 164; 1.164-1.)

  Social security taxes; Switzerland. No deduction or credit is allowable for social security taxes paid or accrued to Switzerland on or after November 1, 1980.

ISSUE

  Is a deduction or a credit allowable under section 164(a) or section 901(b) of the Internal Revenue Code for social security taxes paid or accrued to the Swiss Confederation ('Switzerland') on or after November 1, 1980?

FACTS AND LAW

  On November 1, 1980, pursuant to section 233(a) of the Social Security Act, 42 U.S.C. section 433 (1980), the United States entered into an agreement with Switzerland establishing a totalization arrangement between the United States social security system and the Switzerland social security system for purposes of establishing an individual's entitlement to and the amount of benefits on the basis of such individual's period of coverage under both systems.

  Section 317(b)(4) of the Social Security Amendments of 1977, Pub. L. No. 95- 216, 1978-1 C.B. 462, 467, provides that, notwithstanding any other provision of law, social security taxes paid by any individual to a foreign country shall not be deductible by, or creditable against the income tax of, any such individual where an agreement pursuant to section 233 of the Social Security Act has been entered into between such foreign country and the United States.

HOLDING

  Neither a deduction nor a credit is allowable under section 164(a) or section 901(b) of the Code for social security taxes paid or accrued to Switzerland on or after November 1, 1980.

Rev. Rul. 81-39, 1981-1 C.B. 396, 1981-5 I.R.B. 14.