[Congressional Record (Bound Edition), Volume 151 (2005), Part 7]
[Extensions of Remarks]
[Page 9361]
[From the U.S. Government Publishing Office, www.gpo.gov]




 LEGISLATION TO TREAT EMPLOYMENT TAXES PAID TO THE EU BY EMPLOYEES OF 
 THE EU AS INCOME TAXES PAID TO A FOREIGN COUNTRY FOR PURPOSES OF THE 
                           FOREIGN TAX CREDIT

                                 ______
                                 

                             HON. TOM UDALL

                             of new mexico

                    in the house of representatives

                        Wednesday, May 11, 2005

  Mr. UDALL of New Mexico. Mr. Speaker, I rise today to introduce 
legislation to correct an outdated tax law that is forcing a husband 
and wife of 27 years from my district to live thousands of miles apart 
during what should be the golden years of their retirement together. In 
introducing this legislation, however, I seek to not only assist the 
couple in my district who has brought this inequity to my attention, 
but also to assist any other families facing the same problem.
  Mrs. Novella Wheaton Nied, a U.S. citizen and native Taosena, and 
Veit Nied, a German citizen, called my attention to this issue early 
last year. The Nieds have been married almost 30 years and have lived 
overseas in various countries for the length of their marriage until 
September 2001. Mr. Nied, an economist, retired in September 2001 from 
the European Commission in Brussels, Belgium. The couple decided to 
return to Taos, New Mexico, Novella's home, for their retirement years, 
but learned upon Veit's approval of permanent resident status in the 
United States that his pension from the European Commission would be 
subject to double taxation--the initial tax by the European Commission, 
and again by the U.S. should he choose to make his residency here.
  Double taxation on his pension will create a hardship for the Nieds 
in their retirement--both financially and emotionally. As a result, Mr. 
Nied did not accept the permanent resident status and has been 
traveling back and forth between Germany and the United States, being 
very cognizant and diligent about following U.S. immigration and 
taxation laws, and therefore has not stayed longer than 120 days per 
annum in the United States, which would render him liable for taxes in 
this country. This unfortunate living situation has been ongoing since 
2001 when they learned of the double taxation and have been seeking a 
solution that would allow them to once again live together.
  During this time, the Nieds have corresponded with the IRS seeking a 
solution to the problem, to no avail. I have consulted with the IRS, as 
well as with the Congressional Research Service, seeking a solution 
short of introducing legislation, but it has become clear that only 
legislation will remedy this problem.
  The IRS tax code is outdated and does not recognize such 
multinational organizations as the EU for purposes of the foreign tax 
credit. As a result, the Nieds, and most likely other families in the 
United States, find themselves in this unfortunate predicament. The 
United States has tax agreements with many countries to prevent double 
taxation, as well as provisions in the tax code that allow resident 
aliens who pay taxes to a foreign country to claim the foreign tax 
credit that reduces their U.S. income taxes. Unfortunately, the EU does 
not qualify as a foreign country for purposes of the foreign tax 
credit.
  As such, today I am introducing legislation that amends the Internal 
Revenue Code to treat employment taxes paid to the European Union by 
employees of the European Union as income taxes paid to a foreign 
country, for purposes of the foreign tax credit. This bill will allow 
Mr. Nied, and others in his situation, to qualify for the foreign tax 
credit.
  Mr. Speaker, this is a simple bill that brings a section of the tax 
code up to date with the changes in international political 
institutions. While it certainly will help Mr. and Mrs. Nied, this 
legislation will also help other families who face the same situation. 
I urge my colleagues to support this legislation and pass it quickly to 
allow the Nieds, and others, to be permanently reunited so that they 
may enjoy their years of retirement in the company of their loved ones.

                          ____________________