TN 12 (09-98)

A. BACKGROUND

In August 1991, a tax treaty was finalized which exempted residents of Germany from the nonresident alien tax withholding.

• The exemption was effective for benefits paid after December 31, 1989 for areas which were formerly in West Germany. It was effective for benefits paid after December 31, 1990 for areas which were formerly in East Germany.

• Late in January 1992, each beneficiary was notified of the tax treaty and its effect.

• The change appeared in the February 3, 1992 payment.

• SSA refunded taxes erroneously withheld from benefits paid in 1992 in a separate payment late in January 1992.

• IRS refunded taxes erroneously withheld from benefits paid in 1990 and 1991 in separate checks.

B. POLICY

The tax treaty is effective for benefits paid to residents of Germany, as shown above, for months after November 1983.