Pinoy workers in CNMI now have to pay US Social Security, Medicare

GARAPAN, Saipan – Filipino workers in the US Commonwealth of the Northern Mariana Islands (CNMI) are now subject to US Social Security and Medicare taxes because of the federalization of CNMI immigration.   The US Internal Revenue Service said Filipino workers in the CNMI are no longer exempt from the Federal Insurance Contribution Act (FICA), unless they hold a valid H-2 U.S. visa.   FICA covers Social Security and Medicare taxes.   “Unless an individual is eligible for FICA exemption based on some other circumstances, FICA taxes will apply to these Filipino workers,” said Lynne Camillo, branch chief of IRS's Employment Tax Branch 2.  The IRS letter outlines changes to the way Social Security taxes are applied to Filipino workers in the CNMI. Former agreements between the Philippine and US governments exempted Filipino workers in the CNMI from FICA.   As the CNMI lost control over its immigration to the US federal government, that FICA exemption for Filipino workers no longer applies.   For many Filipino workers in the CNMI, another set of salary deductions is an added blow to their finances especially when employers in the CNMI are implementing work hour cuts, reduced benefits, and other austerity measures.   This is one area that US government officials have yet to clarify, along with a Nov. 28, 2011 effective date of the FICA tax deductions.  CNMI-issued umbrella permits expired on Nov. 27, 2011. A Filipino worker earning the CNMI’s minimum wage of $5.05 an hour will see a monthly FICA tax deduction of 5.65 percent of their salary or over $45 a month.   This deduction consists of 4.20 percent for US Social Security, and 1.45 percent for Medicare.   The FICA tax salary deduction is on top of the CNMI taxes that Filipino workers and other foreign workers in the CNMI pay.   Mayette Delos Reyes, a Filipino computer operator in the CNMI capital of Saipan for 13 years, said it’s already hard to make ends meet so having almost $50 in additional monthly salary deduction will be an added blow.   “And if I have to pay those taxes, there should be a corresponding benefit.  Will I really get Medicare and Social Security benefits when I need them or when I lose my job?” Delos Reyes told GMANews.TV.  Delos Reyes hails from Lipa, Batangas.   Additional expense   For CNMI employers with Filipino workers, the FICA taxes means an additional expense of almost $62 a month in employer's share for every employee required to pay FICA taxes.  The employer's share is 7.65 of the employee's salary: 6.20 percent for Social Security, and 1.45 percent for Medicare.   CNMI employers with foreign workers now have to remit the taxes to IRS. Philippine Consul General in the CNMI Medardo Macaraig said the Filipino community in the CNMI seems to have different opinions about the federal taxes, but they and their employers have to follow the US government’s laws and policies.   Macaraig said if there is a push for affected Filipinos in the CNMI to retain exemption from the FICA tax, this will have to be taken up by the Philippine government with the United States government.   “I still have to further consult with the Filipino community here,” he told GMANews.TV.   Rey Perez, 45, a Filipino teacher at a private school in Saipan, said Filipino workers have no choice but to follow the US law on tax payments.   “If you really want to stay in the US and your US citizen immediate relatives will petition you, paying the federal taxes will be a benefit to you and your family.  But for those who do not have US citizen families, we don’t really know,” said Perez, who has been in the CNMI since 1991. Mirasol Dayao, a Filipino accountant in Saipan for 15 years, said she sees the contributions to US Social Security and Medicare as a form of “investment.”    Dayao, who hails from Leyte, said she will have something to look forward to when she retires.   Just like Dayao, other accountants in the CNMI are saying that workers may only benefit from their FICA tax deductions if they contribute to the system for 40 quarters or 10 years.   But the US law that federalized CNMI immigration has a transition period ending on Dec. 13, 2014. - VVP, GMA News   The law’s goal is to zero out the foreign worker population in the CNMI after that date, unless the US government extends the transition period and allow foreign workers to continue working in the CNMI beyond 2014.   Bonifacio Sagana, president of a workers’ group called Dekada Movement, said he and other Filipino workers who arrived in the CNMI back in the late '80s used to pay FICA taxes that were automatically deducted from their paychecks.   But he said when the FICA tax deductions ceased, they didn't reap any benefit from the regular FICA tax deductions.   “If that’s going to happen again, wherein Filipino workers as temporary workers pay taxes and don’t benefit from it, that is unfair,” Sagana said.   A Florida-based human rights advocate and former CNMI teacher Wendy Doromal posed this question:  “Why should the U.S. government tax foreign workers for benefits that they will never receive? In the CNMI, there is presently no way for the typical temporary foreign worker with a CW visa to obtain status, and no track to U.S. citizenship.”