Answers to IRS Questions - Stimulus Package Rebates for Guest Workers

April 28, 2008

My April 23, 2008 post discussed a letter from a guest worker on Rota asking income tax questions. The guest worker had used Form 1040A for years to file her income tax, but was instructed this year to use Form 1040NR, a form for non-resident workers. Those required to use that form had to be in the US for fewer than 183 days during 2007. She had been in the CNMI for 14 years, and questioned why the Dept. of Finance Office on Rota was instructing guest workers to use that form.

I contacted some U.S. Congressional Offices seeking answers, and received this reply:

"The person I talked to at the IRS' legislative affairs office agreed that if someone has been filing a particular 1040 in the past, they shouldn't need to switch to the 1040NR this year: "It's odd that they being told to file the 1040NR, since only non-resident aliens are to use that form... There have not been any changes about filing for Tax Year 2007 if the individual is required to file with the IRS."

"People who are getting mixed or confusing messages about what forms they should have filed should follow up with the IRS' Taxpayer Advocate Service: 1-877-777-4778. They could also call one of the Hawaii offices of the IRS at (808) 933- 6973."

Eloy Inos Says Some Workers May Get Tax Incentive

Today's Marianas Variety reports that some non-resident workers may get a stimulus rebate from the federal government. The article states:

“The general rule is that (the U.S. rebates) do not apply to nonresident aliens,” he said in an interview.

But there are some alien workers who may get paid.

The key is your Social Security number. There are only certain people who are considered eligible. Residents and resident aliens, those are determined by their Social Security numbers assigned by the Social Security Administration,” he added.

He said individual income tax returns filed with their office are also submitted to the Social Security Administration for verification purposes.

“When you file your return, we send it to the network to validate your SS number,” he said.

An undetermined number of foreign workers on the islands have received letters from the U.S. Internal Revenue Service with instructions on how to determine the amount of stimulus payments they may receive.

One of them showed this reporter the letter from the IRS which states: “We are sending this notice to let you know that based on this new law, the IRS will begin sending the one-time payments starting in May. To receive a payment in 2008, individuals who qualify will not have to do anything more than file a 2007 tax return. The IRS will determine eligibility, figure the amount and send the payment.”

The stimulus package entitles a single taxpayer a rebate of up to $600, and $1,200 for married couples, plus additional amounts for each qualifying child.

According to a tax briefing from CCH, a Wolters Kluwer Business: “Rebates will also be available to qualifying taxpayers who reside in U.S. territories or possessions with tax systems that mirror or do not mirror the Internal Revenue Code. Guam, the Northern Mariana Islands and the U.S. Virgin Islands have mirror Code tax systems. American Samoa and Puerto Rico do not, but the Treasury Department is authorized to forward an equivalent amount to those jurisdictions to implement their own rebate program similar to the new law’s rebates,” it added."

The latest statement from the CNMI government conflicts with some previous statements that concluded that the non-resident workers did not qualify for the stimulus rebates, or questioned whether or not they would receive rebates. This is good news for the guest workers!