- I am a client of yours and would like to ask if you can tell me where I can find the IRS decision that allows Merchant Mariners to receive unemployment when not permanently employed with a company?
Unemployment is governed by the individual states. Hence it is not an IRS related activity. It also isn’t specific to mariners.
Temporary Employment and Maritime Rotary Positions
A good industry for comparison would be the trade unions (electricians, plumbers, etc…) They receive a rotary position from the union. When the position is no longer available they are eligible for unemployment benefits (State specific). Mariners are also given a rotary position. When they are relieved the position is no longer available.
Most unemployment programs require the applicant to be “actively seeking work”. The contention can be made to deny a claim when a mariner has been relieved if they are not actively seeking new employment. Most programs provide a derivative of the following –
- If your usual occupation is seasonal, you must look for other types of work in the off season. If you are on temporary layoff, you may seek temporary work until recalled.
- If you belong to a “hiring hall”, a union that does not allow you to look for work on your own, you do not have to personally seek work. However, you must be in good standing with the union and on their work referral list.
Accordingly, mariners who are union members do not have to seek alternate employment if the Union forbids it.
Mariners identifying Tax Home vs. Unemployment Home?
One of the issues encountered in recent years has been with receiving unemployment benefits from a Mariner’s state of residence. For example, if the mariner resides in Massachusetts, but works for a California based company, Massachusetts will generally deny the claim requiring the Mariner to apply for benefits directly in California.
This presents some interesting issues. While 46 USC 11108 only directly identifies limitations on tax jurisdiction specifying a mariner on interstate or foreign articles “is not subject to the income tax laws of a State or political subdivision of a State, other than the State and political subdivision in which the individual resides, with respect to compensation for the performance of duties”, it does set specific guidelines.
The purpose of this legislation was to limit the imposition of taxes to mariners from states outside of their tax home. Like other protective acts, it prevents companies (and States) from assessing taxes from mariners who very well may have never been physically present in the State in question. It seems that the intent of congress was to establish that mariners are not tax transients and to treat all income as sourced to their tax home.
Confusion Setting In
If a mariner living in Massachusetts working for a company based in another state cannot have income in any other state besides their state of residence, how can they be required to apply for unemployment in another state? By law, they have no earned income in the other State.
Simply stated – All of the mariners’ wages are required to be reported as sourced to their state of residency. Accordingly, unemployment claims should be processed and sourced via the Mariners tax home.