Identification Number:
RS 02002 TN 24
Intended Audience:See Transmittal Sheet
Originating Office:ORDP ODEPPIN
Title:International Agreements - Continued
Type:POMS Transmittals
Program:All Programs
Link To Reference:
 

PROGRAM OPERATIONS MANUAL SYSTEM
Part RS – Retirement and Survivors Insurance
Chapter 020 – Coverage Under International Agreements
Subchapter 02 – International Agreements - Continued
Transmittal No. 24, 10/25/2022

Audience

PSC: CA, CS, ICDS, IES, ISRA, RECONR, SCPS, TSA, TST;
OCO-OEIO: CR, CTE, FCR, RECONR;
OCO-ODO: CR, CST, CTE, CTE TE;
FO/TSC: CS, CS TII, CSR, CTE, DRT, FR, OA, OS, RR, TA, TSC-CSR;

Originating Component

ODEPPIN

Effective Date

Upon Receipt

Background

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 02002.050 Effective Date of the U.S. Japan Totalization Agreement

In addition to the specific changes listed, we updated this section to include title change, plain language, other editorial and minor format changes.

Sub-section A: We made minor edits to the language.

Sub-section B: We clarified the language.

 

RS 02002.055 Scope of the U.S. Japan Agreement

In addition to the specific changes listed, we updated this section to include title change, plain language, other editorial and minor format changes.

Sub-section A: We made minor edits to the language. We added information about section 226 (Medicare benefits).

Sub-section B: We edited the title.

 

RS 02002.060 General Coverage Rule for Employment under the Agreement with Japan

In addition to the specific changes listed, we updated this section to include title change, plain language, other editorial and minor format changes.

Sub-section A: We made minor edits to the language.

Sub-section B: We clarified the language.

 

RS 02002.065 Detached Worker Rule under the U.S. Japan Agreement

In addition to the specific changes listed, we updated this section to include title change, plain language, other editorial and minor format changes.

Sub-section A: We edited the title, and made minor edits to the language.

Sub-section B: We changed the title, and clarified the language.

 

RS 02002.070 Coverage Rule for Crews of Ships and Aircraft under the U.S. - Japan Agreement

In addition to the specific changes listed, we updated this section to include title change, plain language, other editorial and minor format changes.

Sub-section A: We changed the title.

Sub-section B: This is a new subsection that adds language for flight crews.

Sub-section C: We added additional POMS references.

 

RS 02002.075 Crews of Aircraft Rule under the Agreement with Japan

This section was archived. The usable language was moved to RS 02002.070.

 

RS 02002.080 Rule for Government Employees under the U.S. - Japan Agreement

In addition to the specific changes listed, we updated this section to include title change, plain language, other editorial and minor format changes.

Sub-section A: We made minor edits to the language, and changed the title.

Sub-section B: We clarified the language, and changed the title. We also added a subsection for definitions.

 

RS 02002.085 Coverage Rule for Self-Employment under the U.S. - Japan Agreement

In addition to the specific changes listed, we updated this section to include title change, plain language, other editorial and minor format changes.

Sub-section A: We made minor edits to the language.

Sub-section B: We clarified the language.

 

RS 02002.090 Special Exceptions to the Coverage Rules under the Agreement with Japan

In addition to the specific changes listed, we updated this section to include title change, plain language, other editorial and minor format changes.

Sub-section A: We made minor edits to the language.

Sub-section B: We changed the title, and clarified the language.

 

RS 02002.092 Processing Requests for Special Exceptions under the Agreement with Japan

This section was archived. The usable language was moved to RS 02002.090.

 

RS 02002.095 Certificates of Coverage under the U.S. - Japan Agreement

In addition to the specific changes listed, we updated this section to include title change, plain language, other editorial and minor format changes.

Sub-section A: We changed the title, and made minor edits to the language.

Sub-section B: We clarified the language, and updated the SSA address. In number two, we updated all of the Japanese addresses.

Subsection D: This a new subsection that addresses processing certificates of coverage.

Subsection E: This is a new subsection where we added POMS references.

 

RS 02002.098 How a Certificate of Coverage is Issued under the Agreement with Japan

This section was archived. The usable language was moved to RS 02002.095.

 

Conversion Table
Old POMS ReferenceNew POMS Reference
RS 02002.070
RS 02002.090
RS 02002.095

RS 02002.050 Effective Date of the U.S. - Japan Totalization Agreement and Effect of Coverage

A. Effective date

The Totalization Agreement with Japan became effective on October 1, 2005.

B. Effect on coverage

If both the U.S. and Japanese social security systems cover a worker's employment or self-employment, the Agreement provides that beginning October 1, 2005, only one country's system will cover the worker's employment or self-employment. The Agreement does not affect a worker's coverage prior to that date.

If a worker had dually covered earnings before October 1, 2005, that were dually covered, those earnings remain subject to social security taxation in both countries.

RS 02002.055 Scope of the U.S. - Japan Agreement

A. United States

For the United States, the Agreement applies to the Old-age, Survivors, and Disability Insurance (OASDI) program and corresponding Federal Insurance Contributions Act (FICA) taxes for employment and Self-Employment Contributions Act (SECA) taxes for self-employment. The Agreement does not apply to Medicare provisions. If an employee is exempt from U.S. Social Security coverage under this Agreement, neither the employee's nor the employer's share of the FICA tax is due as long as the exemption is effective. A self-employed person is exempt from paying SECA taxes (equivalent to the employee's or the employer's 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.

B. Japan

For Japan, the Agreement applies to taxes that finance retirement, survivors and disability benefits, and in some case, taxes for the Japanese health insurance program. Consequently, if a worker is exempt from Japanese coverage because of the Agreement, no contributions are due for these programs.

RS 02002.060 General Coverage Rule and Exceptions for Employment under the U.S. - Japan Agreement

A. Coverage rule and exceptions

1. General territoriality rule

Generally, a person will be subject to the laws for the country where the person performs the work. A worker whose covered employment otherwise cause 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.

2. Exceptions

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. The references below shows where to find these exceptions.

B. References

RS 02002.065 through RS 02002.075, Exceptions to Territoriality Rule.

RS 02002.065 Detached Worker Rule under the U.S. - Japan Agreement

A. Definition of a detached worker

  • A detached worker is employee who is sent by his or her employer in one country to work temporarily in the other country for the same employer or an affiliate of that employer; or

  • A self-employed worker who temporarily transfers his or her self-employment activity from one country to the other country.

  • The employee or self-employed person will continue to be covered under the social security system of the first country, and will be exempt from coverage in the host country provided the period of the transfer is for five years or less.

B. Detached worker rule

1. Qualifying conditions

Under the Agreement, a detached worker remains subject only to the social security laws of the country from which the employer transferred the worker.

However, the worker must meet all of the following conditions

  • The employer and worker expect the period of employment in the host country to last five years or less. The five-year period begins with the date the employment in the host country begins or October 1, 2005 (the effective date of the Agreement) whichever is later; and

  • The employment relationship existed before the employer transferred the worker from the home country; and

  • If an American employer sends an employee to that employer's affiliate in Japan, there must be an Agreement in effect between the American employer and the Internal Revenue Service (IRS) under Section 3121(l) of the Internal Revenue Code with respect to the affiliate. In such cases, the employer must still obtain a certificate of coverage to establish the exemption from Japanese social security taxes.

NOTE: The detached worker rule may apply even if the worker does not go directly from one country to the other but first works in a third country.

2. Family members of detached workers traveling to Japan

  • Family members who are not Japanese nationals and who accompany an exempted worker to Japan will be subject only to U.S. law and will be exempt from Japanese laws, unless he or she requests otherwise.

  • Family members who are Japanese nationals that accompany the exempted worker to Japan will have his or her coverage determined in accordance with Japanese laws.

C. References

  • RS 01901.070, Agreement under Section 3121(l) of the Internal Revenue Code.

  • RS 01901.050C, Employment Outside The United States For An American Employer.

  • RS 02002.095, Certificates of Coverage under the Agreement with Japan.

RS 02002.070 Coverage Rule for Crews of Ships and Aircraft under the U.S. - Japan Agreement

A. Coverage rules for crews of ships

A person employed on a ship who would otherwise be subject to the coverage laws of both the United States and Japan will only have coverage by the country in which he or she resides.

B. Coverage rules for flight crews of aircraft

A person employed as an officer or member of the flight crew on an aircraft who would otherwise be subject to the coverage laws of both the United States and Japan will only have coverage in the country where the employer is headquarters.

C. References

  • RS 01901.030, Employment Within the United States.

  • RS 01901.050, Employment Outside the United States for an American Employee.

  • RS 01901.070, Coverage Outside the United States for a Foreign Affiliate or Subsidiary of an American Employer.

  • RS 01901.150, Employment on American Vessels and American Aircraft.

  • RS 01901.170, Employment on Foreign Vessels or Foreign Aircraft.

  • RS 01901.450, Coverage under International Totalization Agreements.

  • RS 02002.090, Special Exceptions to the Coverage Rules under the Japan Agreement.

RS 02002.080 Rule for Government Employees under the U.S. - Japan Agreement

A. Vienna conventions

In general, nationals of a country who work abroad in the diplomatic or consular services of their country are exempt, under the Vienna Convention on Diplomatic Relations and the Vienna Convention on Consular Relations, from social security coverage and taxes under the laws of the host country unless the host country waives that exemption.

The Conventions, to which both the United States and Japan are parties, apply to the following persons:

  • Members of the staff of a diplomatic or consular mission, including the diplomatic, consular, administrative and technical staffs; and

  • Dependents of members of those staffs; and

  • The domestic service staffs of those missions; and

  • The private servants employed by members of such missions (under certain conditions).

B. Agreement provisions

1. General agreement provisions

The Agreement does not affect the coverage of U.S. or Japanese Government employees to whom the Vienna Conventions apply. These employees remain exempt from coverage in the host country.

The Agreement establishes the following rules for Government employees not covered by the Vienna Conventions:

  • U.S. nationals employed by the U.S. Government or a U.S. Government instrumentality in Japan are subject to U.S. Social Security taxes and coverage laws only.

  • Japanese nationals employed by the Japanese Government or a Japanese Government instrumentality in the United States are subject to Japanese social security taxation and coverage laws only.

2. Definitions

a. U.S. Government employee

For purposes of applying this provision of the Agreement the term, "U.S. Government employee" includes employees of the Federal Government or any of its instrumentalities.

b. Japanese Government employee

For the purposes of applying this provision of the Agreement the term, "Japanese Government employee" includes career civil servants as well as persons contracted to work for the Government of Japan.

C. Reference

RS 01802.050, Coverage Status - Employees of Foreign Governments and International Organizations - Policy Principle.

 

RS 02002.085 Coverage Rule for Self-Employment under the U.S. - Japan Agreement

A. Self-Employment rule

Under the Agreement, a self-employed worker is generally subject to only the laws of the country in which the worker performs the work. However, the Agreement provides for an exception if a person transfers his or her self-employment activity from one country to the other for five years or less. In this case, the self-employment activity remains subject to the social security laws of the country from which the worker transferred the activity and exempt from social security coverage and taxation in the other country.

B. Filing obligation

A self-employed U.S. citizen who is subject only to Japanese law under the Agreement and is exempt from paying Social Security Self-Employment (SECA) tax must still file a U.S. tax return every year.

To show that the self-employment earnings are exempt from U.S. Social Security self-employment tax, the person must do the following:

• Indicate on Schedule SE that the earnings are exempt under the Agreement; and

• Request a certificate of coverage from the Japanese authorities; and

• Attach a photocopy of the certificate of coverage issued by Japan to the U.S. tax return every year as proof of the exemption.

C. Reference

RS 02002.095, Certificates of coverage under the Agreement with Japan.

RS 02002.090 Special Exceptions to the Coverage Rules under the Japan Agreement

A. Intent of special exception provision

The rules of the Agreement for eliminating dual coverage described in RS 02002.055 through RS 02002.085 cover the great majority of situations where the United States and Japan would both cover and tax a worker in the absence of an Agreement. However, sometimes the application of the Agreement rules would yield anomalous or inequitable results. For this reason, the Agreement includes a provision that permits the authorities in both countries to grant exceptions to the normal coverage rules of the Agreement if both sides agree.

The intent of the special exception provision is not to provide the freedom to elect coverage in conflict with normal Agreement rules. The purpose of the special exception provision is to allow the worker to continue coverage in the country where he or she normally works and has coverage, in order to ensure that he or she will meet the eligibility requirements for retirement or disability benefits.

B. Consensus requirement for special exceptions

An employee, employer or self-employed person may request a special exception to the normal coverage rules of the Agreement. Both countries must agree to the special exception and agree on the country of coverage. If either country does not agree with the proposed exception, the applicable coverage rule of the Agreement determines the worker’s coverage.

C. How to request special exceptions

An employee or employer who wishes to apply for a special exception writes to the designated agency in the country where the worker wishes to remain covered.

The letter should:

  • Provide all of the information necessary to issue a certificate of coverage under the U.S.- Japanese Agreement; and

  • Explain the reasons why the special exception should be granted.

1. U.S. coverage desired

Persons wishing to request an exception granting U.S. coverage should write to the following address:

Social Security Administration
Office of Earnings and International Operations
Division of Training and Program Support
P.O. Box 17741
Baltimore, Maryland 21235-7741
FAX Number: 410-966-1861

2. Japanese coverage desired

Persons wishing to request an exception granting Japanese coverage should write to the following address:

Japan Pension Service
International Relations Group
3-5-24, Takaido-Nishi,
Suginami-Ku, Tokyo
168-8505
JAPAN
Fax: +011-81-42-444-9019

D. Reference

  • RS 02002.095, Certificates of Coverage Under the Agreement with Japan.

RS 02002.095 Certificates of Coverage under the U.S. - Japan Agreement

A. Purpose of certificates of coverage

The U.S. Japan Agreement requires each country to issue certificates of coverage forms to workers who, without an Agreement, would have to pay social security taxes to both countries on the same earnings. A certificate serves as proof that the worker named on the certificate is:

  • Subject to the social security taxation and coverage laws of the country issuing the certificate; and

  • Exempt from social security coverage and contributions on the same earnings in the other country.

B. Requesting a certificate of coverage

1. U.S. certificate of coverage

Advise inquirers that to obtain a certificate of coverage from the United States, the employee, employer or self-employed person should contact SSA at:

Social Security Administration
Division of Training and Program Support International Support Branch
P.O. Box 17741
Baltimore, Maryland 21235-7741
U.S.A.
FAX Number: (410)966-1861

Request the U.S. certificate of coverage online at: https://opts.ssa.gov

NOTE: This fax number is only for requesting U.S. certificates of coverage stating that workers named in the letters are exempt from foreign social security coverage and taxation. Employers who have access to the Internet can request U.S. certificates of coverage over the Internet. See www.socialsecurity.gov/international for more information about requesting U.S. certificates of coverage via the Internet. Only an employer or self-employed worker may use the online form to request a certificate of coverage.

IMPORTANT: If an employee requests the certificate of coverage directly, SSA is required to contact the employer to confirm the accuracy of the information provided.

 

2. Japanese certificate of coverage

Advise inquirers that to obtain a certificate of coverage from Japan, they should contact their local Japanese social insurance agency:

National Pension/Employee's Pension or the Insurance and Seamen's Insurance:

Japan Pension Service
3-5-24 Takaido-nishi
Suginami-Ku Tokyo
168-8505
JAPAN

National Public Service Mutual Aid:

Federation of National Public Service
Personnel Mutual Aid Associations
Pension Department
1-1-10, Kudamminami
Chiyoda-ku, Tokyo 102-8082
JAPAN

Local Public Service Mutual Aid:

Pension Fund Association for Local Government Officials
Pension Division 1-1,
Uchisaiwaicho 2 Chiyoda-ku,
Tokyo 100-0011
JAPAN

Private School Teachers' and Employees' Mutual Aid:

The Promotion and Mutual Aid
Corporation for Private Schools of Japan
1-7-5, Yushima
Bunkyo-ku, Tokyo 113-8577
JAPAN

C. Processing requests for certificates of coverage

The responsible party will take the following actions when processing requests for certificates of coverages as indicated:

  • The employer, employee, or self-employed person writes to the appropriate authority requesting a certificate.

  • The appropriate authority issues the certificate, if appropriate.

  • The issuing agency sends the original and one copy to the requester.

    NOTE: The employer's or worker's representative (e.g., attorney or accounting firm) may request the certificate on the employer's or worker's behalf. The employee, employer, or self-employed person must present the certificate to the tax authorities in the other country upon request.

    NOTE: If the person is a self-employed U.S. citizen who is subject only to Japanese laws under the Agreement, he or she must attach a photocopy of the Japanese certificate to his or her U.S. income tax return each year.

D. Required information when making a certificate of coverage request

Advise inquirers that when writing to requesting a certificate of coverage, they should provide the following information:

  • Full name; and

  • Social Security number when requesting a U.S. certificate or the Basic Pension number when requesting a Japanese certificate; and

  • Country of citizenship; and

  • Date and place of birth; and

  • Country of permanent residence; and

  • Name and address of employer in both countries if employed or address of trade or business in both countries if self-employed; and

  • Nature of trade or business, if self-employed; and

  • Date and place of hire by sending company, if employed; and

  • Beginning date and ending date (if known) of employment or self-employment in the other country; and

  • If the transfer is from the United States to Japan, a statement indicating whether or not the worker and any accompanying family members are covered by an employer-sponsored or other private health insurance plan while in Japan; and

  • A statement indicating whether the employee will remain an employee of the U.S. company while working in Japan or will become an employee of a Japanese company.

NOTE: If the worker will be an employee of a Japanese affiliate of an American employer, the request must indicate whether the American employer has entered into an agreement with the Internal Revenue Service under section 3121(l) of the Internal Revenue Code and, if yes, the effective date of such an agreement.

E. Reference

RS 01901.070, Employment Outside the United States for a Foreign Affiliate or Subsidiary of an American Employer.


RS 02002 TN 24 - International Agreements - Continued - 10/25/2022