CX US based staff get the CX treatment

[Shep69]

Oasis--short answer is yes (meaning how the law applies; to the best of my knowledge FICA was never deducted and the programs never entered in the first place for them). There is an exemption ability for duties operated solely as part of an international flight. For example, a flight from SFO to HKG could be exempted. As could a flight from SFO to ANC because it departed the US and flew through non-domestic airspace for a substantial portion of the flight. A flight from ANC-DFW could also be exempted but not a flight from DFW-ATL, LAX-ATL, LAX-SFO, etc.

As I'm sure you know tax law within the US is extremely complex and the interpretations often vary (and are even sometimes reversed by the IRS). The employer has the option to 'opt in' or not if the flight is solely an international one with the particular group of employees. Both the employee and the employer share in the costs of FICA and medicare. While there are opinions on all sides as to whether or not this would be good for the employee, obviously reversing horses in mid stream isn't acceptable to anyone. And more importantly highlights the entity and throws a bunch of flags toward regulatory entities as to why this happened. And the who that looks into the issue may well not be the person you might have spoken with AT that regulatory body.

Much like if you called and asked if you could deduct commuting expenses. Depending on how you phrased it an IRS rep (or tax attorney) might say 'yes' (i.e. If it was for tips or uncompensated laundry expenses), but in general most of these expenses are in reality non-deductible. So if you made a blanket deduction you could later find yourself in trouble--and not know you were in trouble until an audit happened and SHTF.

There are also other payments that occur as part of the job which could be subject to FICA (i.e. What happens for ground/reserve duties compensated but not part of a flight, positioning flights between US destinations--like SFO to JFK, paid online learning, etc.). It's not particularly difficult to segregate the domestic duties and payments from the international ones, but it is something that has to be done. Overall, it's probably easier for the company simply to opt in from an accounting perspective--but they could save money by fractionally opting out if it were done in the conrrect manner.

What isn't acceptable I think really to anyone is (without consultation and by directing 'this is so') taking a position that you 'opt in' and then later saying you are 'opting out.' This would be hard to justify on many levels--not the least of which is it would appear to be a tax dodge and leaves those accumulating credits out in the cold and without benefits. What the F/A's need to do is sign nothing in the near term, organize, get competent tax and legal advice, and find out (given the specifics of the situation) if this is even legal. My guess would be no--other than the domestic duty issue the circumstances haven't changed (i.e. It's the same group of folks under the same set of conditions as before). My guess also is that if they HAVE asked the question the inconvenient specifics of the operation might have been left out (some of which COULD well subject them to FICA).

So it's a huge self-generated quagmire. Not to mention things like SDI. In the US you have to have SOME form of ability to deal with injuries on duty--now that could be an equivalent level of self-insurance, etc. But you can't just dump folks in the cold without recourse (not saying that's what happened in this arena because I don't know if the F/As have been offered an equivalent level of self insurance for short and long term disability -- which might in practice be better than entering the statutory disability world).

The BEST solution would have been to simply leave things alone (at least as FICA and medicare are concerned). I do think if the F/As pursue this in depth (assuming that the company didn't offer them something which would be in the long run better than having Social Security) they can open a huge can of worms and ultimately prevail; the main problem is the US regulatory genie is something that is best left in the bottle.