Foreign Worker News

January 19, 2012

NMC Reverses Charges

A week after the Northern Marianas College (NMC) charged green card holders a $200 "international fee" the college has reversed its policy and stated that the fees will be reimbursed. A press release from NMC admits that the fees, which student, parents and community members challenged, were "erroneously charged."

The charges and ignorant remarks made by college personnel concerning green card holders solicited outrage. Read more in this post, Seeing Red in the CNMI.

Taxes

As announced earlier,  Filipinos and Korean foreign workers and their employers who were formerly exempt from paying Social Security and Medicare taxes in the CNMI now must pay the taxes if they are CW visa holders or employers. H-2 visa holders remain exempt.

From the IRS website:
Commonwealth of the Northern Mariana Islands (CNMI) Filipino workers and new Commonwealth Only Transitional Worker (CW) visa classification. Filipino residents admitted to the Commonwealth of the Northern Mariana Islands (CNMI) are not treated as exempt from social security and Medicare taxes on the basis of holding a work permit under CNMI immigration law. While the CNMI is transitioning to full implementation of U.S. immigration law, a new Commonwealth Only Transitional Worker (CW) visa classification is available for workers in the CNMI. Workers on the CW visa, including those from the Philippines, are not exempt from social security and Medicare taxes. Unless temporary workers in the CNMI are eligible for an exemption from social security and Medicare taxes based on some other circumstances (for example, a Filipino resident holding a valid U.S. H-2 visa), employers are required to withhold and pay social security and Medicare taxes.
To be eligible to collect Social Security benefits a worker would have to acquire 40 quarters or work for ten years in the U.S. This is not likely since under the new federal system, just as in the former CNMI immigration system, CW workers are regarded as disposable commodities and not as future citizens. There was no provision in the CNRA for status and is no law on the books now.

The CNMI government filed a lawsuit in federal court yesterday to sue the U.S. Department of Treasury and the IRS to stop the foreign workers and their employers from having to pay FICA taxes. In the complaint, the government claims that the taxes will rob the CNMI economy of $24 million annually.

You have to appreciate the irony since the CNMI government is also fighting to get many of the foreign workers who contribute to the economy removed from the CNMI.  Another irony is the fact that the CNMI leadership fought to maintain the ridiculously low minimum wage. From the complaint:
35. The current United States minimum wage in the Commonwealth is $5.05 per hour.
36. An employee who works 40 hours per week for 52 weeks in a year would have 2,080 hours or $10,504 in gross income.
37. A Commonwealth employee earning $10,504 per year who is subject to a F.I.C.A. tax rate of 7.65% would incur annual liability of $803. 26 U.S.C. 0 3101.
38. An employer paying an employee $10,504 per year who is subject to F.I.C.A. Tax liability of 7.65% would incur $803 in annual tax liability for the wages paid to that employee. 26 U.S.C. 0 31 11.
39. If 75% of the 22,416 CW-1 classification visas that are authorized to be issued in 2012 are provided to Philippine and Korean workers, working full-time and earning the minimum wage, a total annual F.I.C.A. tax liability (employee and employer) of $27,018,766.
The CNMI minimum wage is so low that foreign workers should be concerned with yet another deduction. In fact, several foreign workers who were interviewed by the Saipan Tribune stated that they haven't been paid their wages for months:
“Having an additional $40 to $45 deduction from my paycheck because of Medicare and Social Security is just too much,” said a 31-year-old restaurant waitress whose work hours have been reduced to anywhere between 51 and 64 hours since last year.

Worse, the employee's payroll has been delayed for three months.

“I won't have anything else left once all these deductions start. I don't even have my paycheck for almost six payrolls now,” said the mother of a 15-month-old child.

Complaining about delayed salaries, she said, might lead to her employer terminating her and her colleagues' employment contracts.

A male colleague, meanwhile, has yet to get his four months' worth of paychecks.

“I haven't been paid for four months. By the time I get my paychecks, they would have lots of deductions. These federal taxes will really hurt us a lot. Can the CNMI government do something about this?” said the 55-year-old father of three.

Both employees asked that their names be withheld, fearing retaliation from their employer.
Side note: The victims of wage theft who were interviewed by the Saipan Tribune may legitimately fear retaliation from their employers, but they should immediately report the wage theft to the Ombudsman. To stay silent may result in them never receiving their wages and only empowers the employers to continue to cheat them and others.

One has to wonder whether the employers who are involved in routine wage theft will actually pay their share of FICA taxes to the IRS. The complaint stated:
47. Imposition of the unlawful F.I.C.A. tax on businesses struggling in the contracting economy will certainly cause a large percentage of businesses to close. Thus, the Commonwealth’s economy will be further devastated and the Government’s budget will be further reduced. Thus, the Commonwealth’s revenue and will shrink further and its ability to provide services will further erode.
CNMI businesses owned by employers who practice routine and ongoing wage theft are seldom, if ever, closed or fined. The CNMI and U.S. governments turn their heads and allow the businesses to stay open while they continue to steal wages from their foreign workers. But will the federal government ignore theft when the money is taken from them? Is tax money from businesses more important to the governments than the employees' wages? Maybe part of the reason for filing the lawsuit is that the Fitial Administration fears that the IRS may actually enforce some laws. They could go after all the businesses that do not pay their share of FICA taxes and may dig even deeper into other areas where federal funds are misspent. They could actually see how rampant wage theft is and finally take action.

This new lawsuit against the Treasury and INS may just encourage the U.S. Treasury Department and federal officials to investigate what the CNMI has done with the ARRA stimulus payments.  Thousands of residents are waiting for previous years' tax rebates and the stimulus payments. They suspect (most likely correctly) that the CNMI government has spent that money, which is why their rebates may never be received. Some of the money owed to the taxpayers includes federal funds from ARRA stimulus grants, the Making Work Pay Tax Credit and the Education Credit

7 comments:

Anonymous said...

Fitial don't give a damn if workers get charged more deductions and never get the SS. He cares about the employer contribution. They're the ones shouting foul. Good point about ARRA stimulus. The feds should countersue the CNMI.

Anonymous said...

Oh the irony. You want your kids to go to school, for free? Pay taxes. Free hospital care? Pay taxes. This is how it works, get used to it. You want food stamps? Pay taxes. Food stamps aren't free. You don't get paid enough? Get another job. You have no job, no money, no food and no savings? STOP having more children!

Anonymous said...

You're absolutely corrrect Anon 8:31!!

It's SaiTANs' businesses! What else?
Who knows SaiTANs could be the one pushing Fitial to file this lawsuit at the expense of US taxpayers....so evil!!!

And yes Wendy, with IRS in the picture, hard for Fitial to go around the bush!

Anonymous said...

Noni 11:08 Fica taxes don't pay for schools, health care or food stamps. Fica taxes are social security (retirement ) and medicare (health care for seniors) This money doesn't go into a general fund.There's something sick about a person who says, "Stop having children." Makes me wish someone said that to your parents before you were born.

Anonymous said...

In regards to paying into SS. You are correct that you have to pay in for at least ten years to be eligible to collect.
The age you are able to collect varies depending on your date of birth.
BUT in case you become disabled,(disabled in the way of a disabling medical condition such as Cancer, or an accident etc.)
if you have paid into SS for five years you are eligible to collect disability payments.
I think (not sure)that you have to be disabled for one year to apply
There is also a provision to be able to collect for a minor child that is disabled also.
I believe that the five year payment into SS is also required.

Also in the case of death of one of the parents there is also money available for the children.

Now to my point,it is my understanding that not only Phil.CW were exempt from SS.
I think there was one or more nationality also, but the rest of the CW, such as Chinese were paying into the SS fund. many for many years.
Many have stated that they have children with disabilities.
I believe that these children are eligible for monthly benefits.
I do not know if this is collectable back into their home countries.
The benefits of these SS taxes should be looked at to see how many that have been here for so many years and paid into this fund can benefit. Also the ones that have gone home already and have fallen into a category that may make them eligible.
I am not sure if the children have to be US Cit. to qualify for benefits, whether it be disability of the child or death of a parent etc.
It may be beneficial to find out from a reputable source in the US.
The sources from the US Embassy in the Foreign countries have so many different opinions.
Also now there are no more checks being issued it is all by direct deposit and there are only certain foreign banks that are approved by the US Govt. to accept Direct Deposits.

Anonymous said...

abused american policy to cheat innnocent out siders....who cares? human rights/fbi is sleebing with corruption....too bad,,,shame on u USA (United Silent Administration)corrupted USA.selfish/greedy USCIS/CNMI officials.do u guys think workers are happy with ur CW-1,,never its an shameful status,,u guys laughing on,,,,its taking time like 2 months common its too much ,,,u guys are still not happy to give pain innocent cnmi foreign workers?,,,,,sunami on the way,,saipan will wipe out soonnnn......get prepared everyone...amen

Anonymous said...

all those who claim Saipan will fall into the ocean when the foreign workers leave.it hasn't happened yet...i see more and more locals working in businesses and although it may take time for them to learn the job I say good for them. How can anyone complain that someone who is born here should be getting a job. We all should be proud of them as we would for any filipino or korean finding honest work in their home country. The parole and cw denials will start coming soon so those who don't get them better be ready to leave. 2014 is coming soon and Saipan will still be here and in the end be stronger when all those who can't get approved for a status allowing them to remain in the U.S. beyond 2014 must leave... there are plent of opportunities in places where good jobs are waiting....might not have all the perks that the U.S. generously offers but that is why everyone wants to come to the U.S. sadly not everyone can.. good luck and don't wait for DHS to force you to leave....