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rempic · Feb 27, 2012, 11:42 PM

Soon I'll start a research work in US (2-year contract), my employer is an US Research institution (Howard Hughes Medical Institute). As Italian I asked to be tax exempted under the US-ITaly income tax treaty. But my employer says that the treaty is not applicable to my case because they are a Research Institution and not an Educational one.

Is it true?

Thanks

MukatA · Feb 28, 2012, 04:55 AM

This is from IRS publication 901. Tax Treaties:
A professor or teacher who is a resident of Italy immediately before the date of arrival in the United States and whose visit to the United States is expected to last no more than 2 years to teach or conduct research at a university, college, school, or other recognized educational institution, or at a medical facility primarily funded from government sources, is exempt from U.S. income tax for up to 2 years on pay from this teaching or research.
This exemption does not apply to income from research carried on mainly for the private benefit of any person rather than in the public interest.

rempic · Feb 28, 2012, 11:16 AM

Howard Hughes Medical Institute is the US largest private supporter for academic biomedical research... then there is a problem

Howard Hughes Medical will pay my salary, but I'll conduct research for Harvard Medical School

THEN, IT IS TRUE THAT... Howard Hughes Medical Institute is NOT funded from government sources ! = NO EXEMPTION FOR ME!

BUT IT ALSO TRUE, my research will be conducted in Harvard for public interest = YES EXEMPTION FOR ME

I've just noticed that in the treaty is used the verb TO CONDUCT not TO PAY,

Then the question is, to BE EXEMPTION OR NOT BE?

taxesforaliens · Feb 28, 2012, 02:12 PM

Howard Hughes is a private organization, so you can not be exempt under the tax treaty. The same happened to me too when I came to the US. At least HHMI offers free health insurance.

rempic · Feb 28, 2012, 03:39 PM

It seems to me that the treaty refers to the quality of the research (public interest) and to the income independently from who pays it.

It seems to me that the treaty is only applicable to some specific professions (Is it? I haven't read it entirely), with the goal of facilitating them! I'm just saying that the objectives of the treaty are: the researcher, the beneficiary of the research ( public of private) and the researcher income!

I might be wrong but I think this is what is literally written in the articles 20.1 and 20.2 :)

MukatA · Feb 28, 2012, 07:05 PM

rempic: Ask AtlantaTax Expert. Send him a private message.
Also medical research is almost always conducted for public interest.

rempic · Feb 28, 2012, 07:42 PM

I'm new here, how can I do it?

MukatA · Feb 28, 2012, 07:52 PM

Click AtlantaTaxExpert and select Send a Private messagae ot AtlantaTaxExpert.