Guide to Global Payroll Management - 2020 - D-146

Guide to Global Payroll Management

Page 2

Form 2032 (Rev. 11-2010)

General Instructions

Where To File

Section references are to the Internal Revenue
Code.

Send three copies of this form to:
Internal Revenue Service
Ogden, UT 84201-0023

Before April 21, 1983, only domestic
corporations could enter into this agreement to
cover only U.S. citizens employed by foreign
subsidiaries. For this agreement, a foreign
subsidiary was defined as a foreign corporation
in which:
* at least 20% of the voting stock was owned by
the domestic corporation, or
* more than 50% of the voting stock was owned
by another foreign corporation in which the
domestic corporation owned at least 20% of the
voting stock.
After April 20, 1983, any American employer
(no longer limited to a domestic corporation) can
enter into this agreement to cover U.S. resident
aliens as well as U.S. citizens employed by a
foreign affiliate. For this agreement, a foreign
affiliate is any foreign entity (no longer limited to
a foreign corporation) in which the American
employer owns at least a 10% interest in the
voting stock or profits. This interest must be
owned directly or through one or more entities.
A domestic corporation having an agreement
in effect that was entered into before April 21,
1983, can elect to apply the post-April 20,1983
rules to such agreements. If a domestic
corporation makes this election, social security
coverage will be extended to U.S. resident alien
employees of any foreign subsidiary for which
U.S. citizens are currently covered by an existing
agreement. In addition, the election allows a
domestic corporation to extend social security
and Medicare coverage to U.S. citizens and
resident aliens employed by a foreign entity that
did not qualify for coverage under the old 20%
ownership rules, but that now qualifies under the
10% ownership rules.
Note. The United States has social security
(totalization) agreements with specific countries.
These agreements ensure that social security
taxes are paid to only one country. However,
these agreements may affect the withholding
requirements resulting from filing Form 2032. For
more information, see Social Security and
Medicare Taxes in Pub. 54, Tax Guide for U.S.
Citizens and Resident Aliens Abroad.
Purpose of form. An American employer uses
this form to:
* Enter into the agreement specified in 3121(l) to
extend coverage under Title II of the Social
Security Act to U.S. citizens and resident aliens
abroad by foreign affiliates,
* Amend a previous agreement, or
* Elect to apply the rules in effect after April 20,
1983, to agreements in effect on that date.
For this agreement, an American employer is
an employer that is:
* The United States or any instrumentality
thereof,
* An individual who is a resident of the United
States,
* A partnership if two-thirds or more of the
partners are residents of the United States,
* A trust if all the trustees are residents of the
United States, or
* A corporation organized under the laws of the
United States or of any state.

D-146

An American employer already filing Form 941,
Employer's Quarterly Federal Tax Return, should
file Form 2032 with the Internal Revenue Service
where the employer files Form 941 (generally
their principal place of business). For electronic
Form 941 filers, send Form 2032 to Internal
Revenue Service, Cincinnati, OH 45999-0038.
Enter on Form 2032 the employer identification
number (EIN) as shown on Form 941. This will
help the IRS process your form faster.

Completing Form 2032
Complete Form 2032 in triplicate. Each copy of
the form must be signed and dated by the
individual authorized to enter into the agreement,
amendment, or election. Attach to each form
evidence showing the authority for such
individual to sign the form. For example,
corporations must include a certified copy of the
minutes of the board of directors' meeting.
After the director signs and dates the form, it
constitutes the agreement, amendment, or
election authorized by section 3121(l). The IRS
will return one copy of Form 2032 to the
American employer, send one copy to the Social
Security Administration, and keep one copy with
all related papers.
Original agreements. Check the box on line 1.
Also check the applicable box on line 1a or b to
designate when the agreement will take effect.
Amending agreements. You may amend an
agreement at any time to extend coverage to
any foreign affiliate not covered by an existing
agreement. File Form 2032 in triplicate, and
check the box on line 2. If you amend an
agreement entered into on or before April 20,
1983, without making the election to apply the
rules in effect after that date, the agreement and
amendments will continue to be governed by the
rules in effect before April 21, 1983.
Effective date. If you file an amendment to an
agreement on Form 2032 to include foreign
affiliates not previously covered, and if the field
director signs the amendment during the quarter
for which the original agreement is first effective
or during the first month following that quarter,
the amendment will be effective as of the
effective date of the original agreement. But if
the amendment is signed by the field director
after the end of the 4th month for which the
original agreement is in effect, the amendment
will not be effective until the first day of the
quarter following the one in which the field
director signed the amendment.
Election to apply post-April 20, 1983 rules. A
domestic corporation having an agreement in
effect that was entered into before April 21,
1983 (old agreement), may elect to have the
rules in effect after April 20, 1983, apply to the
old agreement. File Form 2032 in triplicate, and
check the box on line 3.
If you make this election, it will be effective for
all foreign entities covered by the agreement. By
making the election, U.S. resident alien
employees as well as U.S. citizen employees will
be covered by the agreement.

To extend coverage to any foreign affiliate not
covered by an agreement, indicate the name and
address of the foreign affiliate on line 4 and
check the box on line 2 for the amended
agreement, and the box on line 3 for the
election.
Effective date. Generally, the election will be
effective on the day following the quarter in
which the election is signed by the field director.

No Termination of Agreement
Once you enter into an agreement, you cannot
terminate it, either in its entirety or with respect
to any foreign affiliate. However, the agreement
will terminate for a foreign entity at the end of
any quarter in which the foreign entity, at any
time in that quarter, ceased to be your foreign
affiliate.
Privacy Act and Paperwork Reduction Act
Notice. We ask for the information on this form
to carry out the Internal Revenue laws of the
United States. We need it to figure and collect
the right amount of tax. Section 6109 requires
you to provide your taxpayer identification
number (SSN or EIN). Section 3121 of the
Internal Revenue Code allows employees of
foreign affiliates to be covered under social
security. Routine uses of this information include
giving it to the Social Security Administration for
use in calculating social security benefits, the
Department of Justice for civil and criminal
litigation, and cities, states, and the District of
Columbia for use in administering their tax laws.
We may also disclose this information to federal
and state agencies to enforce federal nontax
criminal laws and to combat terrorism. We may
also give the information to foreign countries
under tax treaties. If you want this coverage, you
are required to give us this information. If you fail
to provide this information in a timely manner, or
you provide incorrect or fraudulent information,
you may be denied this coverage and you may
be liable for penalties and interest.
You are not required to provide the
information requested on a form that is subject
to the Paperwork Reduction Act unless the form
displays a valid OMB control number. Books or
records relating to a form or its instructions must
be retained as long as their contents may
become material in the administration of any
Internal Revenue law. Generally, tax returns and
return information are confidential, as required
by section 6103.
The time needed to complete and file this form
will vary depending on individual circumstances.
The estimated average time is: Recordkeeping,
4 hr., 46 min.; Learning about the law or the
form, 35 min.; Preparing and sending the form
to the IRS, 42 min. If you have comments
concerning the accuracy of these time estimates
or suggestions for making this form simpler, we
would be happy to hear from you. You can write
to: Internal Revenue Service, Tax Products
Coordinating Committee, SE:W:CAR:MP:T:T:SP,
1111 Constitution Ave. NW, IR-6526,
Washington, DC 20224. Do not send Form 2032
to this address. Instead, see Where To File
above.
Guide to Global Payroll Management - 2020

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