Rev. Rul. 56-135

Amounts received by United States citizens living and working in the Republic of Panama as social security benefits under the provisions of the Republic of Panama Decree Law No. 14, dated August 27, 1954, which amended the original Law No. 134, dated April 27, 1943, do not constitute taxable income to them and are excludable from gross income for Federal income tax purposes. The benefit payments that may be made thereunder cover sickness, maternity, disability, old age and death. Such benefits are deemed to be basically similar to the sundry insurance benefit payments made to individuals under the United States social security system which are described and held to be nontaxable to the recipients in I. T. 3447, C. B. 1941-1, 191.