PROGRAM OPERATIONS MANUAL SYSTEMPart RS – Retirement and Survivors InsuranceChapter 020 – Coverage Under International AgreementsSubchapter 01 – International AgreementsTransmittal No. 45, 04/19/2021
The Office of Data Exchange, Policy Publications, and International Negotiations is now responsible for negotiating and implementing bilateral Social Security agreements. Accordingly, we are revising existing Totalization POMS sections to account for new component names, addresses, and workload processes. We also updated these instructions to meet the Agency's plain language requirements.
Summary of Changes
RS 02001.055 Scope of the U.S. - Italian Agreement
In addition to the specific changes listed, we updated this section to include plain language, editorial, and minor format changes.
Subsection A - We revised the heading, and updated the language.
Subsection B - We revised the heading, and updated the language.
RS 02001.060 General Coverage Rule for Employment - U.S. - Italian Agreement
Subsection A - We revised the heading, and updated the language in sub-sections 1 and 2.
Subsection B - We added the name of the POMS referenced for clarity.
RS 02001.065 Nationality Rule in the U.S. - Italian Agreement
Subsection A - We edited the title. Aligned out of place text.
Subsection B - We added language coverage for U.S. nationals. We added language covering the same periods of work.
RS 02001.070 Election of Coverage - Italians and Dual Nationals
In addition to the specific changes listed, we updated this section to include plain language, editorial and minor format changes.
Subsection A - We revised the heading. We revised the language in sub-headings 1, 2, and 3, and edited the titles of sub-headings 2 and 3.
Subsection B - We revised the heading and updated the language. We created an additional bullet for clarity.
RS 02001.075 Special Exceptions to the Coverage Rules Under the U.S. - Italian Agreement
Subsection A - We revised the heading.
Subsection B - We revised the heading. Made minor edits to the language.
For the United States, the agreement applies only to the Retirement, Survivors, Disability, and Health Insurance (RSDHI) program’s Federal Insurance Contributions Act (FICA) taxes for employment and Self-Employment Contributions Act (SECA) taxes for self-employment, including the Medicare portion of these taxes. If an individual is exempt from U.S. Social Security coverage under this agreement, the employee or employer's share of the FICA tax is not due as long as the exemption is in effect. A self-employed person is exempt from paying SECA taxes (equivalent to the employee and employer shares of the FICA tax) for any period the exemption is effective.
The U.S. laws to which the Agreement applies are title II of the Social Security Act except section 226 (Medicare benefits), 226A (Medicare coverage for certain persons suffering from renal disease) and section 228 (special age-72 payments-Prouty benefits). Hospital insurance under Medicare has been excluded. It is understood, though not specified, that persons to whom the Agreement applies who qualify independently for Medicare hospital insurance benefits would be entitled to receive such benefits.
For Italy, the agreement applies to social security coverage and taxes that finance retirement, survivors and disability benefits, as well as family allowances. Consequently, if an individual is exempt from Italian coverage because of the agreement, no contributions are due under any of these programs. However, a worker may still have to pay contributions for other types of Italian benefits financed through social security taxes such as cash sickness, maternity, and unemployment benefits, etc.
Under the agreement, employment is ordinarily subject to the coverage laws of the country where the employee performs the work. An employed or self-employed person, who would otherwise have dual coverage under the laws of both countries, will remain covered only under the laws of the country where he or she performs the work.
The agreement provides several exceptions to the territoriality rule to ensure that a worker's coverage is under the system of the country to which he or she has the greater attachment.
RS 02001.065 Exceptions to the general rule, (Nationality Rule in the U.S. - Italian Agreement).
Under the agreement with Italy, the primary exception to the “territoriality” rule is based on the nationality of the worker. As explained below, the nationality rule applies to both employees and self-employed persons.
An employee or self-employed worker who would normally be subject to coverage and taxation under both the U.S. and Italian social security systems will be assigned to only one system in accordance with the following rules.
Services performed by a U.S. national in Italy which are covered under the laws of the United States shall remain covered under the laws of the United States.
An Italian or dual national who, with respect to the same period of work, would be subject to the laws of both States shall, for such period, elect to remain subject to the laws of one of the States and shall be exempt from the laws of the other State.
An Italian or dual (U.S./Italian) national must elect either U.S. or Italian social security coverage. The worker will be subject to and taxed only by the country he or she elects. Elections must be made in accordance with the rules in RS 02001.070 (Election of Coverage - Italians and Dual Nationals).
NOTE: Services performed by an Italian national in the United States for an Italian employer or for an enterprise controlled by an Italian firm shall be covered under the laws of Italy.
A national of a country other than the United States or Italy will be subject to and taxed only by the social security system of the country where he or she performs the work.
Under the agreement, an Italian national or a dual (U.S./Italian) national who would otherwise have dual coverage by both the U.S. and Italian social security systems (dually covered) for the same work must elect to be subject to one system or the other.
A dually covered Italian national or dual (U.S./Italian) national must make an election within the 3-month period following the month the work begins.
EXAMPLE: A dually covered Italian national or dual (U.S./Italian) national who began work in the United States in January 2020 would have until April 30, 2020 to make an election.
A dually covered Italian national, who is NOT a dual national, may amend a previous election:
During the second year after the year in which a period of work began; or
Upon gaining or losing status as lawfully admitted for permanent residence in the United States.
An amended election is effective from the date the worker makes the election. The election applies to all future periods of work that are subject to dual coverage, even if the worker begins a new period of employment with a different employer. A worker may further amend an election only if his or her residence status changes as stated above.
A dual U.S./Italian national may change an initial election only if he or she changes employers and the new period of employment is subject to coverage in both countries.
An Italian national or a dual (U.S/Italian) national will make an election of coverage by requesting a certificate of coverage from the country under whose social security system he or she wishes coverage. If a worker fails to request a certificate of coverage from either country within the prescribed period, and pays social security taxes to only one country, that country deems that the worker elected coverage under its system.
If an Italian national fails to make a timely election and pays social security taxes to both countries or to neither country, then Italian coverage applies to his or her work; and
If a dual national fails to make a timely election and pays social security taxes to both countries or to neither country, then the country where the worker performs the work covers the work.
The rules for eliminating dual social security coverage described in RS 02001.060 and RS 02001.065 cover the majority of situations where a worker would otherwise be subject to both U.S. and Italian coverage. However, the rules for eliminating dual social security coverage may have unintended results in certain cases. For this reason, the U.S. - Italian agreement includes a special exception provision.
An employee, employer, or a self-employed person may request a "special exception" to the normal coverage rules of the U.S. - Italian agreement. The United States and Italy must both agree before either country can grant a special exception. If either country does not agree with a requested special exception, the person's work is subject to the agreement's applicable coverage rule.