Rev. Rul. 79-291

LAW AND FACT

Section 233(a) of the Social Security Act (42 USC 433) authorizes the President of the United States to enter into agreements establishing totalization arrangements between the social security system of the United States and the social security system of any foreign country, for the purposes of establishing entitlement to and the amount of old age, survivors, disability, or derivative benefits based on a combination of an individual's periods of coverage under the social security systems of both countries.

The Social Security Amendments of 1977, section 317(b)(4), Pub. L. 95-216, 1978-1 C.B. 462, 467, provides,

Notwithstanding any other provision of law, taxes paid by any individual to any foreign country with respect to any period of employment or self-employment which is covered under the social security system of such foreign country in accordance with the terms of an agreement entered into pursuant to section 233 of the Social Security Act shall not, under the income tax laws of the United States, be deductible by, or creditable against the income tax of, any such individual.

On November 1, 1978, a totalization agreement as referred to in section 317(b)(4) of the Social Security Amendments of 1977, became effective for purposes of payments and benefits under the respective social security laws of the United States and Italy.

HOLDING

An individual who pays or accrues liability for social security taxes on that individual's self-employment income or wages to Italy, on or after November 1, 1978, is not allowed a deduction under section 164(a) or a credit under section 901(b) of the Internal Revenue Code of 1954, for such payment or liability.