European Stars and Stripes (Newspaper) - January 22, 1990, Darmstadt, Hesse                                Of is irs Matthews Case could Cost or save thousands for overseas employees by Randy Mcclain financial writer a non appropriated fund employ Crany battling the internal Rcv Var Back taxes will have his Day in i ploy cd from West Csc nut service c i court on Tangerman Loveday 1990. The . Court of appeals for the District of Columbia has scheduled Oral arguments april 16 in the Case of David Matthews a Naf employee in Schwet Zingen. Matthews Case which will be argued before a three judge panel is being watched closely by thousands of other non appropriated fund employees overseas. That s because Matthews contends he.  other Naf employees Are eligible for the so called foreign earned income exclusion a Rule that allows Many americans overseas to escape . Taxes on the fim $70,000 they Cam. The internal Revenue service maintains that government employees can claim the exclusion. Non appropriated fund agencies arc those that generate most of their own revenues relying link on tax dollars. Examples include the Community and family support Agency stars and stripes and cafes. The irs wants at least $6,000 in Back taxes from Matthews a Community and family support Agency employee. The irs is seeking payment for tax years 1983,19s4 and perhaps other years in which Matthews wrongfully took the exclusion. The irs has Long held that . Government employees arc prohibited by Law from claiming the lucrative tax break. And non appropriated fund workers although not paid directly with . Tax dollars arc considered government employees bythe irs. But Gerald Kafka Matthews attorney contends the tax Reform act of 1981 changed Naf employees status and made them eligible for the foreign earned income exclusion. Last year the . Tax court ruled against Matthews and Ron Davis another Naf employee from sch Atzingen with whom Matthews Case has been consolidated. Kafka says the outcome could be different this time. I think this time we re going to get a fresh hearing the Washington attorney said. Naf personnel Aren t treated As employees of the . Lovurn mint for any other purposes under . And they should not be treated As government employees for lax  the irs meanwhile has claims in the works against hundreds of other americans in Europe All Naf employees who filed tax returns in recent years claiming the right to take the exclusion. The irs recently estimated it had lost $30 million in tax Revenue Over a three year period As a result of the improper filings. Kafka said the irs routinely allowed Naf workers to Lake the exclusion until it realized How much Money was at stake. If Matthews wins everyone outside the United states wins with him Kafka said. Gola1 appealing a tax ruling just got easier by Ron Jensen suit writer taxpayers in Europe who disagree with lax rulings now get a personal touch when making appeals. A yearlong Pilot program begun Jan. I allow taxpayers to Appeal rulings directly to an irs employee in Europe. Formerly appeals were made by correspondence with officials in Washington . Anyone who disagrees with a tax examiner s ruling requiring payment of additional taxes has the right to Appeal said Myma Johnson who will hear the cases. What we arc hoping to do is offer these taxpayers an Opportunity to meet with me face to  she said. " johnson., who works out of the Isof Piccin the . Embassy in Bonn West Germany has the authority to make final settlements in cases involving less than $ 100.000. She will meet with people at irs offices in London Paris Bonn and Rome. Johnson believes the personal touch will be appreciated by taxpayers. I think there was a problem in the past she said. There s an awful lot that is lost when you try to put something in  the Opportunity for a personal conference May prompt More of the i million taxpayers in Europe to file appeals she said. James j. Casimir irs director of appeals said the program is an attempt to extend service to americans no matter where they live. We ought to extend the service to match the obligation he said. This is definitely a customer service  Casimir said the irs has no idea How Many customers will take advantage of the program. For that reason the first year of the service is considered a test of it works Well it will be expanded worldwide. The program is welcomed by John Martin san chief of the Legal division of v corps in Frankfurt. I think it will be used a lot he  old program he said was unwieldy and people often would Wail weeks for an answer Only to be told that one More question needed an answer. Traditionally we be been a Little piece of America that s been clipped off and floated a hell of a Long Way from the irs Mann san said. To get forms or a Friendly voice on the phone was  Larry Lagrand an irs representative in Bonn said the Agency also has offices in the embassies in Rome London and Paris. Each of these offices will offer the same kinds of things he said. The offices Are a source of information for taxpayers he said. The european offices can help get an answer More quickly than Ifa question is mailed to the irs in Washington. We try to have the ability to answer people s questions on the whole of what irs  Lagrand said. Much of the time however irs employees Deal with situations covered by tax treaties Between the United slates and the Host nation. I work within the tax treaty to solve double taxation  Lagrand said. The double taxation question arises because German taxes Are based on residency and american taxes arc based on citizenship Lugrand paid advertisement said. It is possible then for a business to face taxes in both , a person or business Seldom has to pay double taxes he said. A settlement usually is reached within the parameters of the  irs in Europe also exchanges information with tax officials in Host nations Lagrand said. Host governments like to know if its citizens arc receiving income from the United states and vice versa. Most importantly the irs is there to remind americans abroad that they did not leave behind their responsibilities As taxpayers."1 think a lot of people Don t realize that if you arc a . Citizen you arc liable for american taxes whether you have . Income or not said William Connett an irs representative in Paris. We Are one of the few countries that has a worldwide tax  or bloc wants to save you Money. Or Block s worldwide offices save you time and Money. We prepare Federal and All state income tax returns. We guarantee your satisfaction. We dig for every deduction and credit to which you Are entitled. Well find you the biggest refund you have coming. Put us to work for you. Available through your Exchange at Sembach a and Bamberg or Block America s lax team january 22,1990 is financial planning guide