Foreign shipowners and opera-
tors of vessels calling at U.S. ports
can thank the U.S. cruise industry
for successfully lobbying favorable
changes to U.S. tax laws that oth-
erwise would have affected them.
Section 1174 of the Taxpayer Relief
Act of 1997, signed by the
President on August 5th, defini-
tively exempts the taxation of
income earned by nonresident
alien crewmen in connection with
foreign vessels engaged in trans-
portation between the U.S. and a
foreign country. Foreign shipown-
ing and operating corporations
that have been subject to the filing
requirements imposed by the 4
percent gross transportation
income tax are all too familiar with
the withholding voucher books
that are automatically sent to all
foreign corporations filing Form
1120F, irrespective of their tax-
exempt status under an applicable
tax-treaty.
In recent years, the IRS has
published internal position papers
justifying the taxation of alien
crewmen aboard vessels and air-
craft earning U.S.-source wages.
Last year, the IRS's stance and
intention to enforce the withhold-
ing requirement for wages earned
by alien crewmen was solidified
through the promulgation of regu-
lations imposing the requirement
on foreign employers.
Section 1174(a)(1) rectifies the
inconsistency by amending section
861(a)(3) of the
Internal Revenue Code, which
now reads in pertinent part that:
,..[C]ompensation for labor or
services performed in the United
States shall not be deemed to be
income from sources within the
United States if the labor or ser-
vices are performed by a nonres-
ident alien individual in connec-
tion with the individual's tempo-
rary presence in the United
States as a regular member of
the crew of a foreign vessel
engaged in transportation
between the United States and a
foreign country or possession of
the United States.
The welcomed legislation bene-
fits all foreign companies that
have vessels trading to the U.S.
and especially the cruise industry
whose largest market is the U.S.
Because of the large number of
employees working aboard cruise
vessels, administration of the
withholding tax would have
resulted in high administrative
costs.
Moreover, the withholding tax
could have had further adverse
ramifications in the event that
withholding triggered an obliga-
tion for foreign crewmen to file
U.S. income tax returns.
For more information on the
preceding article, contact Arthur
Dimopoulos at Fort & Schlefer,
L.L.P., 1401 New York Ave., N.W.,
Washington, D.C. 20005, tel: (202)
467-5900; fax: (202) 783-6898.
Heavy lift capabilities
with no height restrictions.
Circle 223 on Reader Service Card
Bollinger
Morgan City
( I Zollinger Morgan City, Inc. is located at the intersection of the
H3 Intercoastal Waterway and Bayou Bouef at Amelia, Louisiana. The
facility operates 3 floating drydocks with the capacity to pick up vessels
up to 6,000 tons with 110 ft. clearance between the 20 ft wing walls.
Bollinger Morgan City also offers an on-site stockroom and warehouse
storage area of 36,000 sq. ft. fully stocked to satisfy all customer needs.
ISO 9001 CERTIFIED Pa Sox 2628' MorĀ«an Cit* LA 70381, 697 DeGmvelle, Amelia, LA 70340
VISIT US AT BOOTH 2139 AT THE 1997 INTERNATIONAL WORK BOAT SHOW IN Phone: 504/631-3600, Fax: 504/6314993
NEW ORLEANS, LOUISIANA - NOVEMBER 6-7 http://www.bollingershipyards.com
I AL ALWAYS HORIZONTAL
A NEW INNOVATIVE ACCOMMODATION LADDER FROM AB WELIN
HAS TRAVELLED
THE HIGH SEAS
SINCE 1901
AUTOMATIC SELF
LEVELLING STEPS FOR
TELESCOPIC LADDERS.
WE HAVE MADE IT POSSIBLE WITH
OUR NEW INVENTION, (patent pending)
CALL US FOR MORE INFORMATION!
Fiskhamnsgatan 4
414 85 Goteborg,Sweden
Tel: +46 31 427770
Fax: + 46 31 127304
welin.ab@swipnet.se
Boat Davits
MoB & Raft
Cranes
Pilot hoist &
Platforms
Winches for
Marine use
http://home4.swipnet.se/~w-43354
Circle 200 on Reader Service Card
Digital Wave Publishing