[Code of Federal Regulations]
[Title 26, Volume 18]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR301.6316-7]

[Page 217-218]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 301_PROCEDURE AND ADMINISTRATION--Table of Contents
 
                               Collection
 
Sec. 301.6316-7  Payment of Federal Insurance Contributions Act taxes 
in foreign currency.

    (a) In general. The taxes imposed on employees and employers by 
sections 3101 and 3111, respectively, of chapter 21 of the Code (Federal 
Insurance Contributions Act) or the corresponding sections of the 
Internal Revenue Code of 1939 may, with respect to wages (as defined in 
section 3121(a) of chapter 21 of the Code or the corresponding section 
of the Internal Revenue Code of 1939) paid in nonconvertible foreign 
currency (as defined in paragraph (b) of Sec. 301.6316-2) for services 
performed on or after January 1, 1951, be paid in that currency if all 
such wages--
    (1) Are paid from funds made available to a foundation or commission 
established in a foreign country pursuant to an agreement made under the 
authority of section 32(b) of the Surplus Property Act of 1944, as 
amended (50 U.S.C. App. 1641(b)(2)), or established or continued 
pursuant to an agreement made under authority of the Mutual Educational 
and Cultural Exchange Act of 1961, as amended (22 U.S.C. 2451); and
    (2) Are paid to a U.S. citizen for services performed in the employ 
of such foundation or commission.
    (b) Return requirements--(1) Statements required. (i) A return on 
which payment of Federal Insurance Contributions Act taxes is made in 
accordance with this section shall have attached thereto a statement, 
certified by the foundation or commission filing the return, stating 
that the foundation or commission is an organization established 
pursuant to an agreement made under authority of section 32(b) of the 
Surplus Property Act of 1944, as amended, or established or continued 
pursuant to an agreement made under authority of the Mutual Educational 
and Cultural Exchange Act of 1961, as amended.

[[Page 218]]

    (ii) The taxpayer shall also attach to the return a statement 
showing the rates of exchange used in determining in United States 
dollars the wages reported on the return and the taxes due with respect 
thereto. See paragraph (c)(1) of this section.
    (2) Cross references. For the place for filing returns of the 
Federal Insurance Contributions Act taxes, see Sec. 31.6091-1(c) of 
this chapter (Employment Tax Regulations). For the time for filing 
returns of the Federal Insurance Contributions Act taxes, see Sec. 
31.6071(a)-1 of this chapter (Employment Tax Regulations).
    (c) Payment of tax--(1) Determination of the tax. In determining in 
U.S. dollars the wages required to be reported on the return and the 
taxes due with respect thereto, the taxpayer shall use the rate of 
exchange which most clearly reflects the correct equivalent in dollars, 
whether it be the official rate, the open market rate, or any other 
appropriate rate.
    (2) Deposit of foreign currency with disbursing officer. (i) After 
determination is made in U.S. dollars of the Federal Insurance 
Contributions Act taxes with respect to wages paid in nonconvertible 
foreign currency, the amount so determined shall be deposited in the 
same nonconvertible foreign currency with the disbursing officer of the 
Department of State for the foreign country where the fund is located 
from which such wages were paid. The amount of the foreign currency to 
be deposited shall be that amount which, when converted at the rate of 
exchange used on the date of deposit by the disbursing officer for the 
acquisition of such currency for his official disbursements, equals the 
taxes determined in U.S. dollars.
    (ii) The disbursing officer may rely upon the taxpayer for the 
determination of the amount of tax payable in foreign currency but may 
not accept any such currency for deposit until the taxpayer has 
presented for inspection the certified statement referred to in 
paragraph (b)(1) of this section. Upon acceptance of foreign currency 
for deposit the disbursing officer shall give the taxpayer a receipt in 
duplicate showing the name and address of the depositor, the date of the 
deposit, the amount of foreign currency deposited and its equivalent in 
U.S. dollars on the date of deposit, and the kind of tax for which the 
deposit is made.
    (iii) Every taxpayer making a deposit of foreign currency in 
accordance with this paragraph shall attach to the return required to be 
filed in accordance with paragraph (b) of this section the original of 
the receipt given by the disbursing officer. Tender of such receipt to 
the Director of International Operations shall be considered as payment 
of tax in an amount equal to the U.S. dollars represented by the 
receipt.
    (iv) A taxpayer shall make the deposit required by this paragraph in 
ample time to permit it to attach the receipt to its return for filing 
within the time prescribed by Sec. 31.6071(a)-1 of this chapter 
(Employment Tax Regulations).