- 4 - Raytheon on Johnston Island.2 During 1999 and 2001, Mr. Smith received wages from Raytheon totaling $92,276 and $99,980, respectively. Around December 12, 2000, Raytheon issued another letter to Mr. Smith (Raytheon’s December 12, 2000 letter) that included revisions to certain terms and conditions of his employment on Johnston Island. Raytheon’s December 12, 2000 letter stated, inter alia: “Johnston Island is not tax exempt; therefore, standard tax obligations apply.” Raytheon included with Raytheon’s December 12, 2000 letter certain documents, including a document that was identical to Raytheon’s description of the tax treatment of Johnston Island assignment expenses. On March 9, 2000, the Internal Revenue Service (IRS) issued a news release entitled “Johnston Inland [sic] Individuals May Not Claim Income Exclusion” (IRS March 9, 2000 news release). That news release stated in pertinent part: The Internal Revenue Service reminds individuals in an unincorporated U.S. territory, such as Johnston Island, that they may not claim the exclusion for personal service income earned in a U.S. possession under sec- tion 931. They also cannot exclude this income as “foreign earned income” under the exclusion provision in section 911. At one time Johnston Island was listed as a U.S. pos- session for purposes of the possessions exclusion under 2Throughout 1999 and 2001, Mr. Smith worked on Johnston Island for Washington Group International, formerly Raytheon. For convenience, we shall hereinafter refer only to Raytheon, and not to Washington Group International.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011