Part II. Treaties and Tax Legislation

Sec. 301.6114–1(c)(1)(iii), the reporting requirement is waived with regard to taxpayers taking the position that a U.S. treaty reduces or modifies the taxation of income derived from public or private pensions or social security. Accordingly, taxpayers claiming exemption for French social security benefits pursuant to Article 18(1)(b) of the Treaty are not required to disclose this position on their income tax return for the year in which the distributions are received.

EFFECTIVE DATE

The mutual agreement is applicable to tax years beginning on or after January 1, 1996. Pursuant to Article 26(1) of the Treaty, an individual who paid U.S. income tax on distributions from the French social security regime (Basic Plan and Complementary Plans) for one or more tax years beginning on or after January 1, 1996, may request a refund of such tax within three years of the date of this news release provided such individual was a resident of the United States during each year for which a refund is requested. Individuals who took the position for purposes of determining their taxable income in the United States that mandatory or voluntary contributions to the French social security regime (Basic Plan and Complementary Plans) were deductible or excludible, should file amended returns for all tax years beginning on or after January 1, 1996, for which the statute of limitations on assessment and collection has not expired as of the date of this news release (generally calendar years 1998, 1999, and 2000).

CONTACT INFORMATION

For further information or assistance regarding the U.S. income tax treatment of social security pensions received from France, please contact David Kosterlitz, IRS Large & Mid-size Business, International, Tax Treaty, ((202) 874-1550 (not a toll-free number)). For information or assistance regarding the French tax treatment of social security pensions received from France, please contact Christiane Marechal, Fiscal Attache, French Embassy, ((202) 944-6390 (not a toll-free number)). In France, please contact Centre des Impots des Non-Residents, 9, Rue d’Uzes, 75094, Paris Cedex 02.

Subpart A.—Tax Conventions and Other Related Items

French Social Security Agreement

Notice 2001–41

The following is a copy of the News Release issued by the Director, International (U.S. Competent Authority) on May 31, 2001 (IR–2001–54).

U.S. AND FRANCE AGREE ON TAXATION OF FRENCH SOCIAL SECURITY

Washington — The Competent Authorities of the United States and France reached a mutual agreement on the tax treatment of contributions to, and distributions from, the French social security regime (Basic Plan and Complementary Plans). The agreement clarifies the application of Article 18 of the Convention between the Government of the United States of America and the Government of the French Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and Capital (the “Treaty”), signed on August 31, 1994, and entered into force on December 30, 1995.

BACKGROUND

Subparagraph (a) of Article 18(1) of the Treaty provides that, except as provided in subparagraph (b), distributions from private pension and other retirement arrangements derived and beneficially owned by a resident of a Contracting State in consideration of past employment shall be taxable only in that State. Subparagraph (b) provides that pensions and other payments made under the social security legislation of a Contracting State to a resident of the other Contracting State shall be taxable only in the firstmentioned State.