September 20, 2006
Tax guidance on Jones Act waiver
The U.S. Treasury has issued a guidance on treatment of foreign-flag ships temporarily operating in the U.S. domestic trade as a result of the post-Katrina Jones Act waiver.
Essentially, it seems to say that these operations will be treated as incidental to the international operation of the tanker and that the income earned by crew members is regarded as being from sources outside the United States.
You'd better check the exact meaning with an attorney though. Here's one example of what it says:
"For purposes of section 7701(b)(7), the IRS will not challenge a position taken by an individual who is temporarily present in the United States on any day as a regular member of the crew of a foreign vessel operating in the United States pursuant to the waiver that the individual is not present in the United States on such day..."
Incidentally, the waiver of the Jones Act for transportation of petroleum and petroleum products on non-coastwise-qualified tankers expired at 12:01 a.m. eastern daylight time on September 19, though the waiver with respect to transport of petroleum released from the Strategic Petroleum Reserveis still in effect.