                                             ORY ESHEL AND LINDA CORYELL ESHEL, PETITIONERS
                                                  v. COMMISSIONER OF INTERNAL REVENUE,
                                                               RESPONDENT
                                                    Docket No. 8055–12.                               Filed April 2, 2014.

                                                  In 1987, the United States and France entered into a Total-
                                               ization Agreement to coordinate benefits under their respec-
                                               tive social security systems. Section 317(b)(4) of the Social
                                               Security Amendments of 1977 (SSA), Pub. L. No. 95–216, 91
                                               Stat. at 1540, provides that, notwithstanding any other provi-
                                               sion of law, taxes paid by an individual to a foreign country
                                               ‘‘in accordance with the terms of ’’ a totalization agreement
                                               shall not be creditable or deductible for Federal income tax
                                               purposes. In 2008 and 2009 Ps paid two taxes to the French
                                               Government—la contribution sociale ge´ne´ralise´e (CSG) and la
                                               contribution pour le remboursement de la dette sociale
                                               (CRDS)—and claimed credits for these payments under I.R.C.
                                               sec. 901. R disallowed the claimed credits in reliance on SSA
                                               section 317(b)(4), contending that Ps paid CSG and CRDS to
                                               France in accordance with the terms of the U.S.-France Total-
                                               ization Agreement.
                                                  1. Held: Taxes are paid to a foreign country ‘‘in accordance
                                               with the terms of ’’ a totalization agreement if those taxes are
                                               covered by, or within the scope of, the totalization agreement.
                                                  2. Held, further, CSG and CRDS are covered by, or within
                                               the scope of, the U.S.-France Totalization Agreement because
                                               they ‘‘amend or supplement’’ the French social security laws
                                               enumerated in that Agreement.
                                                  3. Held, further, SSA section 317(b)(4) precludes Ps’ foreign
                                               tax credits for CSG and CRDS paid to France in 2008 and
                                               2009.



                                                                                                                                   197




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                                     198                  142 UNITED STATES TAX COURT REPORTS                                     (197)


                                           Stuart Evan Horwich, for petitioners.
                                           Scott A. Hovey, for respondent.
                                                                                   OPINION

                                       LAUBER, Judge: Respondent determined income tax defi-
                                     ciencies of $12,104 and $47,401 for petitioners’ 2008 and
                                     2009 tax years, respectively, and petitioners timely sought
                                     redetermination under section 6213. 1 The deficiencies stem
                                     from disallowance of foreign tax credits that petitioners
                                     claimed for payment of certain French taxes. The sole
                                     remaining issue for decision is whether two of these taxes—
                                     la contribution sociale ge´ne´ralise´e (general social contribution
                                     or CSG) and la contribution pour le remboursement de la
                                     dette sociale (contribution for the repayment of social debt or
                                     CRDS)—are creditable taxes for Federal income tax pur-
                                     poses. The parties have filed cross-motions for summary
                                     judgment on this question.
                                       The parties agree that CSG and CRDS satisfy the usual
                                     standards for creditability under section 901. The question
                                     we must answer is whether section 317(b)(4) of the Social
                                     Security Amendments of 1977 (SSA), Pub. L. No. 95–216, 91
                                     Stat. at 1540, nevertheless precludes credits for these taxes.
                                     This depends on whether CSG and CRDS ‘‘amend or supple-
                                     ment’’ specified laws making up the French social security
                                     system, in which case they are covered by the social security
                                     totalization agreement between the United States and
                                     France. We answer these questions in the affirmative and
                                     accordingly hold that CSG and CRDS are not creditable for-
                                     eign taxes for Federal income tax purposes. We will therefore
                                     grant respondent’s motion for summary judgment and deny
                                     petitioners’ motion.

                                                                                Background
                                        Ory and Linda Coryell Eshel, husband and wife, are dual
                                     citizens of the United States and France. They resided in
                                     France during 2008 and 2009. Ory Eshel worked for a non-
                                     American employer that paid him a salary for services per-
                                           1 Unless
                                               otherwise indicated, all statutory references are to the Internal
                                     Revenue Code (Code) in effect for the tax years in issue, and all Rule ref-
                                     erences are to the Tax Court Rules of Practice and Procedure. We round
                                     all monetary amounts to the nearest dollar.




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                                     (197)                           ESHEL v. COMMISSIONER                                        199


                                     formed in France. Petitioners paid various taxes to France,
                                     including the French income tax, unemployment tax, CSG,
                                     and CRDS. During 2008–09 petitioners also paid French
                                     social security taxes and participated in the French social
                                     security system. Because Ory Eshel worked for a non-Amer-
                                     ican employer, he was not required to pay social security
                                     taxes to the United States. See secs. 3101(a), 3111(a),
                                     3121(b). Petitioners did not otherwise participate in the U.S.
                                     social security system during 2008–09.
                                       By virtue of being U.S. citizens, petitioners were liable for
                                     U.S. income tax for 2008 and 2009, and they timely filed
                                     Federal income tax returns for both years. On these returns
                                     petitioners claimed credits under section 901 for the French
                                     income tax, French unemployment tax, CSG, and CRDS paid
                                     during each year. For 2008 petitioners paid $19,061 on
                                     account of CSG and CRDS; for 2009 they paid $32,672 on
                                     account of CSG and CRDS.
                                       Respondent issued petitioners a notice of deficiency
                                     denying the entire foreign tax credit they had claimed for
                                     each year. Petitioners timely petitioned this Court for
                                     redetermination of the resulting deficiencies. Respondent has
                                     since conceded that all French taxes for which petitioners
                                     claimed credits, apart from CSG and CRDS, are creditable.
                                     The parties filed cross-motions for summary judgment on the
                                     sole issue left for decision, namely, whether CSG and CRDS
                                     are creditable foreign taxes for Federal income tax purposes.

                                                                                Discussion
                                     I. Summary Judgment Standard
                                       The purpose of summary judgment is to expedite litigation
                                     and avoid unnecessary and expensive trials. See FPL Grp.,
                                     Inc. & Subs. v. Commissioner, 116 T.C. 73, 74 (2001). We
                                     may grant summary judgment when there is no genuine dis-
                                     pute of material fact and a decision may be rendered as a
                                     matter of law. Rule 121(b); Elec. Arts, Inc. v. Commissioner,
                                     118 T.C. 226, 238 (2002). The moving party bears the burden
                                     of proving that there is no genuine dispute as to any mate-
                                     rial fact, and the Court views all factual materials and
                                     inferences in the light most favorable to the nonmoving
                                     party. Dahlstrom v. Commissioner, 85 T.C. 812, 821 (1985).




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                                     200                 142 UNITED STATES TAX COURT REPORTS                                     (197)


                                        The parties agree on all questions of basic fact and have
                                     expressed that consensus by filing cross-motions for sum-
                                     mary judgment. The parties disagree on one point that may
                                     be relevant in interpreting the international agreement at
                                     issue—namely, how the French Government, at various
                                     times, has characterized CSG and CRDS for purposes of EU
                                     law and internal French law. See infra pp. 221–225. We con-
                                     clude that this disagreement does not give rise to a material
                                     factual dispute that would prevent the Court from deciding
                                     this case on summary judgment.
                                        Under Rule 146, this Court’s determination of foreign law
                                     ‘‘shall be treated as a ruling on a question of law.’’ 2 As a
                                     result, disputes about the proper interpretation or character-
                                     ization of a foreign law are not disputes of material fact that
                                     preclude summary judgment. See Reese v. Commissioner, 64
                                     T.C. 395, 397 (1975); Access Telecom, Inc. v. MCI Telecomm.
                                     Corp., 197 F.3d 694, 713 (5th Cir. 1999) (‘‘[D]ifferences of
                                     opinion among experts on the content, applicability, or
                                     interpretation of foreign law do not create a genuine issue as
                                     to any material fact[.]’’). Under Rule 146 the Court ‘‘may con-
                                     sider any relevant material or source’’ in determining a prin-
                                     ciple of foreign law, but expert testimony or affidavits,
                                     accompanied by extracts from foreign legal materials, ‘‘ha[ve]
                                     been and will likely continue to be the basic mode of proving
                                     foreign law.’’ Universe Sales Co. v. Silver Castle, Ltd., 182
                                     F.3d 1036, 1038 (9th Cir. 1999) (citing 9 Charles Alan Wright
                                     & Arthur R. Miller, Federal Practice and Procedure: Civil,
                                     sec. 2444 (2d ed. 1995)).
                                        While the parties’ experts disagree on how the French
                                     Government over time has characterized CSG and CRDS,
                                     this is a difference of opinion among experts on the content,
                                     applicability, and interpretation of foreign law. This dif-
                                     ference of opinion may have some bearing on our evaluation
                                     of these taxes under the international agreement involved
                                     here. However, it does not constitute a genuine dispute of
                                     material fact that prevents the Court from deciding the issue
                                     summarily.
                                       2 Rule 146 is taken almost verbatim from Fed. R. Civ. P. 44.1. See Note

                                     to Rule 146, 60 T.C. 1137. The rules are functionally identical. See Abdel-
                                     Fattah v. Commissioner, 134 T.C. 190, 194–195 (2010); PNC Fin. Servs.
                                     Grp., Inc. v. Commissioner, 503 F.3d 119, 126 (D.C. Cir. 2007), aff ’g T.C.
                                     Memo. 2004–10.




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                                     (197)                           ESHEL v. COMMISSIONER                                        201


                                     II. Governing Statutory Framework
                                        Subject to certain limitations, a U.S. citizen or resident
                                     may elect to take a foreign tax credit against his U.S. income
                                     tax liability for income taxes paid or accrued to a foreign
                                     country or a U.S. possession. Sec. 901(a). This credit miti-
                                     gates the effect of double taxation where, as here, France and
                                     the United States both seek to tax the same income. A for-
                                     eign levy that is imposed on net gain is generally a creditable
                                     income tax. See sec. 1.901–2(b), Income Tax Regs. The
                                     Internal Revenue Service (IRS) has recognized that foreign
                                     social security taxes imposed on net income may qualify as
                                     creditable taxes under section 901. See, e.g., Rev. Rul. 69–
                                     338, 1969–1 C.B. 194 (Venezuelan social security tax pay-
                                     ments creditable); Rev. Rul. 68–411, 1968–2 C.B. 306
                                     (Canadian social security tax payments creditable). Absent
                                     any other limitation, therefore, social security taxes paid to
                                     France generally would be creditable under section 901.
                                        If a U.S. citizen divides his working career among multiple
                                     countries, he may pay social security taxes to various
                                     nations, in various amounts, during various periods of social
                                     security coverage. Before 1977 there was no authority in the
                                     Social Security Act for the United States to enter into agree-
                                     ments with other countries to provide for coordination
                                     between their social security systems. This lack of coordina-
                                     tion posed two potential problems. First, the wages of a U.S.
                                     citizen employed by a U.S. company abroad might be subject
                                     to duplicative social security taxes in both nations. Second,
                                     U.S. citizens who divided their working careers among mul-
                                     tiple countries might suffer a loss of continuity in their social
                                     security coverage. Under the U.S. and many foreign systems,
                                     entitlement to social security benefits depends on a person’s
                                     period of coverage, that is, the number of years during which
                                     he or she has worked and ‘‘paid into the system.’’ A U.S. cit-
                                     izen might work in numerous countries and pay into
                                     numerous social security systems, yet not accrue a sufficient
                                     period of coverage under any one system to qualify for bene-
                                     fits when he retires, becomes disabled, or dies. Alternatively,
                                     a U.S. citizen might qualify only for reduced benefits based
                                     on a period of coverage considerably shorter than his entire
                                     working career. See generally H.R. Rept. No. 95–702 (Part 1),
                                     at 39 (1977), 1977 U.S.C.C.A.N. 4155, 4196.




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                                     202                  142 UNITED STATES TAX COURT REPORTS                                     (197)


                                       To address these problems, Congress amended the Social
                                     Security Act in 1977 to authorize the President to enter into
                                     social security totalization agreements with foreign countries.
                                     SSA sec. 317(a), 91 Stat. at 1538. This authorization is now
                                     codified in section 233 of the Social Security Act, 42 U.S.C.
                                     sec. 433(a) (2006). It provides in relevant part:
                                             The President is authorized * * * to enter into * * * arrangements
                                           between the social security system established by this subchapter and
                                           the social security system of any foreign country, for the purposes of
                                           establishing entitlement to and the amount of old age, survivors, dis-
                                           ability, or derivative benefits based on a combination of an individual’s
                                           periods of coverage under the social security system established by this
                                           subchapter and the social security system of such foreign country.

                                        Under a totalization agreement, a particular period of
                                     employment or self-employment results in a ‘‘period of cov-
                                     erage’’ under the U.S. social security system or the foreign
                                     social security system, but not both. See 42 U.S.C. sec.
                                     433(c)(1)(B). A ‘‘period of coverage’’ is defined as ‘‘a period of
                                     payment of contributions or a period of earnings based on
                                     wages for employment or on self-employment income.’’ Id.
                                     sec. 433(b)(2). A taxpayer pays social security taxes only to
                                     the country under whose social security system he is covered
                                     for that year. By accruing periods of coverage in each coun-
                                     try’s system, the taxpayer will eventually be entitled to
                                     receive benefits ratably from each.
                                        Pursuant to 42 U.S.C. sec. 433(a), the United States and
                                     France in 1987 executed a totalization agreement. Agreement
                                     on Social Security, U.S.-Fr., Mar. 2, 1987, T.I.A.S. No. 12,106
                                     (Totalization Agreement). This Agreement entered into force
                                     July 1, 1988, and was thus in effect during the tax years at
                                     issue. It implements provisions designed to achieve both of
                                     the objectives that Congress expressed when enacting this
                                     scheme.
                                        The first policy concern is addressed in articles 5 and 7,
                                     which provide that the United States and France will impose
                                     social security taxes on an individual only if he or she is cur-
                                     rently employed within that state. This eliminates the possi-
                                     bility of double taxation. The second policy concern is
                                     addressed in articles 11, 12, and 13, which coordinate bene-
                                     fits between the United States and France. Article 11 pro-
                                     vides that neither country shall ‘‘restrict[ ], suspend[ ] or
                                     terminate[ ] entitlement to or payment of cash benefits solely




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                                     (197)                            ESHEL v. COMMISSIONER                                        203


                                     because the person resides outside or is absent from’’ that
                                     state, so long as the person resides in the other state. Arti-
                                     cles 12 and 13 implement the coordination of benefits by
                                     guaranteeing ratable entitlement to social security benefits
                                     based on the individual’s respective periods of coverage in
                                     each country. 3
                                       When Congress amended the Social Security Act to
                                     authorize the President to enter into totalization agreements,
                                     it made correlative amendments to the Internal Revenue
                                     Code. It amended Code sections 1401, 3101, and 3111 to
                                     exempt an individual’s wages or self-employment income
                                     from U.S. social security taxes if there is a totalization agree-
                                     ment in effect with a foreign country and, under that agree-
                                     ment, such wages or self-employment income are subject to
                                     social security tax in that other country. SSA sec. 317(b)(1)–
                                     (3), 91 Stat. at 1539. In SSA section 317(b)(4), Congress
                                     added the provision at issue here, as follows:
                                           Notwithstanding any other provision of law, taxes paid by any individual
                                           to any foreign country with respect to any period of employment or self-
                                           employment which is covered under the social security system of such
                                           foreign country in accordance with the terms of an agreement entered
                                           into pursuant to section 233 of the Social Security Act shall not, under
                                           the income tax laws of the United States, be deductible by, or creditable
                                           against the income tax of, any such individual.




                                        3 For example, assume that a French citizen spends 7 years (28 calendar

                                     quarters) working in the United States and 20 years (80 calendar quar-
                                     ters) working in France. Absent the Totalization Agreement, this person
                                     would not be eligible for U.S. old-age benefits at all, despite paying U.S.
                                     social security taxes for 7 years, because 10 years of covered employment
                                     are generally required for eligibility. 42 U.S.C. sec. 414 (2006). Under the
                                     Totalization Agreement, the United States would take into consideration
                                     the total number of years that this person worked in the United States
                                     and France; compute the old-age benefit for a worker with 27 years of U.S.
                                     coverage; and pay the individual a ‘‘totalized’’ old-age benefit equal to 7/
                                     27 of a 27-year benefit. France would also totalize benefits by paying the
                                     individual 20/27 of a 27-year benefit computed under its system. This to-
                                     talization would ensure that the individual receives an old-age benefit re-
                                     flecting all 27 years of his working career (7/27 of U.S. benefit and 20/27
                                     of French benefit). See Georgiou v. Apfel, 50 F. Supp. 2d 913, 917 (E.D.
                                     Mo. 1999).




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                                     204                  142 UNITED STATES TAX COURT REPORTS                                     (197)


                                     This statutory provision currently appears at 26 U.S.C. sec.
                                     1401 note. 4
                                       This provision has the effect of preserving parity between
                                     taxpayers who spend their entire careers working in the
                                     United States and those who spend part of their careers
                                     working abroad. No credit or deduction can be claimed
                                     against Federal taxable income for U.S. social security taxes.
                                     In order to prevent disparity of treatment, SSA section
                                     317(b)(4) bars a credit or deduction for foreign taxes paid for
                                     a period that will be ‘‘counted’’ in determining the taxpayer’s
                                     social security benefits under a totalization agreement.
                                       While disagreeing about the proper interpretation of this
                                     statute, the parties agree about its syntactic structure. The
                                     clause beginning ‘‘which is covered’’ must modify ‘‘period of
                                     employment or self-employment,’’ because ‘‘which is’’ cannot
                                     modify the plural word ‘‘taxes.’’ Further, the phrase ‘‘in
                                     accordance with the terms of * * * [a totalization] agree-
                                     ment’’ must modify ‘‘taxes paid’’ at the beginning of the sen-
                                     tence, even though such a phrase would generally be deemed
                                     to modify the closest noun. That must be so because if ‘‘taxes
                                     paid’’ were not modified in this way, SSA section 317(b)(4)
                                     would bar a credit or deduction for all taxes paid to a foreign
                                     country—including ordinary income taxes—for a period in
                                     which a U.S. citizen was covered by a foreign social security
                                     system. The parties agree, and the Court concurs, that Con-
                                     gress did not intend to bar a credit for ordinary income taxes.
                                       In this case, petitioners paid CSG and CRDS to France
                                     with respect to a period of employment (2008–09) that was
                                     covered under the French social security system. The focus
                                     of the parties’ interpretative dispute is whether petitioners
                                     paid these taxes ‘‘in accordance with’’ the terms of the Total-
                                           4 The
                                              fact that Congress did not codify this provision in the United
                                     States Code has no impact on its authoritativeness or legal force. The best
                                     evidence of the laws of the United States is not the United States Code,
                                     but the Statutes at Large. Compare 1 U.S.C. sec. 112 (‘‘[t]he United States
                                     Statutes at Large shall be legal evidence of laws’’) with 1 U.S.C. sec. 204(a)
                                     (the United States Code is ‘‘prima facie’’ evidence of the laws of the United
                                     States). See, e.g., U.S. Nat’l Bank of Or. v. Indep. Ins. Agents of Am., Inc.,
                                     508 U.S. 439, 448 (1993) (‘‘Though the appearance of a provision in the
                                     current edition of the United States Code is ‘prima facie’ evidence that the
                                     provision has the force of law, it is the Statutes at Large that provides the
                                     ‘legal evidence of laws[.]’ ’’ (quoting 1 U.S.C. sec. 112)); Smith v. Commis-
                                     sioner, 114 T.C. 489, 491 (2000), aff ’d, 275 F.3d 912 (10th Cir. 2001).




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                                     (197)                           ESHEL v. COMMISSIONER                                        205


                                     ization Agreement. If so, SSA section 317(b)(4) denies a
                                     credit for these taxes ‘‘[n]otwithstanding any other provision
                                     of law.’’ It is to that question that we now turn.
                                     III. ‘‘In Accordance With’’ the Terms of a Totalization Agree-
                                          ment
                                        When construing a statute, a court’s ‘‘analysis begins ‘with
                                     the language of the statute’ ’’ and, ‘‘where the statutory lan-
                                     guage provides a clear answer, it ends there as well.’’ Hughes
                                     Aircraft Co. v. Jacobson, 525 U.S. 432, 438 (1999) (quoting
                                     Estate of Cowart v. Nicklos Drilling Co., 505 U.S. 469, 475
                                     (1992)). In Erlich v. United States, 104 Fed. Cl. 12 (2012), the
                                     U.S. Court of Federal Claims issued what appears to be the
                                     only judicial opinion that has addressed the interpretation of
                                     SSA section 317(b)(4). The court in Erlich concluded that the
                                     phrase ‘‘in accordance with’’ as used in that section has a
                                     readily discernible plain meaning. We agree with that conclu-
                                     sion.
                                        In Erlich, the question was whether a U.S. citizen could
                                     claim a foreign tax credit for taxes paid to France, including
                                     CSG and CRDS. The taxpayer participated in the French
                                     social security system during the relevant years, and the
                                     Government argued, as it does here, that SSA section
                                     317(b)(4) precluded a credit. The court determined that ‘‘in
                                     accordance with’’ means ‘‘in agreement with’’ or ‘‘in con-
                                     formity with,’’ finding ‘‘no reason to believe that in Section
                                     317(b)(4) Congress used the phrase’’ to imply anything other
                                     than its plain meaning. Erlich, 104 Fed. Cl. at 16. The court
                                     ruled that taxes are paid ‘‘in accordance with’’ the terms of
                                     a totalization agreement when ‘‘this payment is consistent
                                     with the obligation of the taxpayer under the agreement.’’ Id.
                                     at 17.
                                        Generally speaking, international agreements impose
                                     obligations on contracting states, not on taxpayers or citi-
                                     zens. But we agree that the court’s interpretation of ‘‘in
                                     accordance with’’ in Erlich makes perfect sense in the context
                                     of SSA section 317(b)(4). Where a totalization agreement is
                                     in effect, a U.S. citizen participates during a given year in
                                     only one country’s social security system, namely, the system
                                     of the country in which he is employed. For that year, his
                                     ‘‘obligation’’ is to pay exclusively to that country whatever




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                                     206                 142 UNITED STATES TAX COURT REPORTS                                     (197)


                                     taxes are covered by the agreement. Thus, if particular for-
                                     eign taxes are covered by, or within the scope of, a total-
                                     ization agreement, the payment of those taxes to the foreign
                                     country is ‘‘consistent with the obligation of the taxpayer
                                     under the agreement,’’ Erlich, 104 Fed. Cl. at 17, and the
                                     taxes are thus paid ‘‘in accordance with’’ the agreement. 5
                                       In Erlich, the court’s conclusion that ‘‘in accordance with’’
                                     means ‘‘consistent with the obligation of the taxpayer under’’
                                     a totalization agreement was sufficient to resolve the sum-
                                     mary judgment issue. That is because the parties had
                                     assumed, for purposes of summary judgment, that CSG and
                                     CRDS are ‘‘social security taxes’’ covered by the Totalization
                                     Agreement. See 104 Fed. Cl. at 13 n.1. Far from so stipu-
                                     lating, petitioners here vigorously dispute that proposition.
                                     The instant case thus requires us to decide a question that
                                     Erlich had no occasion to address, namely, whether CSG and
                                     CRDS are covered by, or within the scope of, the U.S.-France
                                     Totalization Agreement.
                                           A. Taxes Covered by the Totalization Agreement
                                       When interpreting a treaty or other international agree-
                                     ment, we begin with its text. Volkswagenwerk Aktiengesell-
                                     schaft v. Schlunk, 486 U.S. 694, 699 (1988). A treaty is to be
                                     interpreted in accordance with the ordinary meaning of its
                                     terms, consistently with their context and the agreement’s
                                     object and purpose. Sanchez-Llamas v. Oregon, 548 U.S. 331,
                                     346 (quoting 1 Restatement (Third) of Foreign Relations Law
                                     of the United States sec. 325(1) (1986)). Treaties are con-
                                     tracts between sovereigns and, as such, should be construed
                                     to give effect to the signatories’ intent. United States v.
                                     Stuart, 489 U.S. 353, 365–366 (1989). Because treaties are
                                     construed more liberally than private agreements, we may
                                     ascertain their meaning by looking beyond the written words
                                     to the history of the treaty, the parties’ negotiations, and the
                                     practical construction they have adopted. Air France v. Saks,
                                     470 U.S. 392, 396 (1985); see Estate of Silver v. Commis-
                                       5 For example, the French income tax meets all the criteria under SSA

                                     section 317(b)(4) to have a credit precluded, except that the income tax is
                                     not covered by, or within the scope of, the Totalization Agreement. Thus,
                                     petitioners’ payments of French income tax were not made ‘‘in accordance
                                     with’’ the Totalization Agreement and SSA section 317(b)(4) does not bar
                                     a credit for these tax payments.




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                                     (197)                            ESHEL v. COMMISSIONER                                        207


                                     sioner, 120 T.C. 430, 434 (2003); N.W. Life Assurance Co. of
                                     Can. v. Commissioner, 107 T.C. 363, 378–379 (1996).
                                       Article 2 of the Totalization Agreement defines the laws of
                                     each country that are within its scope. As regards the United
                                     States, the ‘‘applicable laws’’ for purposes of the Agreement
                                     are specified provisions of the Social Security Act and the
                                     Internal Revenue Code. As regards France, the ‘‘applicable
                                     laws’’ are defined in article 2(1)(b) to include the following:
                                           i. laws establishing the administrative organization of social security
                                           programs;
                                           ii. laws establishing the social insurance system for nonagricultural
                                           employees and laws establishing the social insurance system for agricul-
                                           tural employees;
                                           iii. laws on prevention and compensation of occupational accidents and
                                           illnesses; laws on nonoccupational accident insurance and insurance
                                           against occupational accidents and illnesses for self-employed persons in
                                           agricultural occupations;
                                           iv. laws on family benefits;
                                           v. laws concerning special social security systems to the extent they
                                           relate to the risks or benefits covered by the laws enumerated in the pre-
                                           ceding clauses, but excluding the special system for civil servants;
                                           vi. the law on the system for seamen;
                                           vii. laws concerning sickness and maternity insurance for non-
                                           agricultural self-employed workers and laws concerning sickness and
                                           maternity insurance for agricultural self-employed workers; [and]
                                           viii. laws concerning old-age allowances and old-age insurance for non-
                                           agricultural self-employed workers, laws concerning old-age and inva-
                                           lidity insurance for clergymen and members of religious orders, laws
                                           concerning old-age and invalidity insurance for attorneys, and laws con-
                                           cerning old-age insurance for agricultural self-employed workers.
                                       The French taxes at issue here, CSG and CRDS, were
                                     enacted after the effective date of the Totalization Agreement
                                     and thus are not specifically listed among the eight enumer-
                                     ated categories of laws. However, article 2(3) further pro-
                                     vides:
                                           This Agreement shall also apply to legislation which amends or supple-
                                           ments the laws specified in paragraph 1; however, it shall apply to
                                           future legislation of a Contracting State which creates new categories of
                                           beneficiaries only if the Competent Authority of that Contracting State
                                           does not notify the Competent Authority of the other Contracting State
                                           in writing within three months of the date of the official publication of
                                           the new legislation that no such extension of the Agreement is intended.




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                                     The parties agree that the text following ‘‘however’’ has no
                                     application here because CSG and CRDS do not create any
                                     new category of beneficiary. Thus, the question we must
                                     answer is whether CSG and CRDS ‘‘amend or supplement’’
                                     the specified French laws.
                                        Article 1(10) of the Totalization Agreement, the definitional
                                     provision, provides that ‘‘[a]ny term not defined in this
                                     Article shall have the meaning assigned to it in the laws
                                     which are being applied.’’ Neither ‘‘amend’’ nor ‘‘supplement’’
                                     is a defined term in article 1. As a result, we apply U.S. legal
                                     concepts in determining whether CSG and CRDS ‘‘amend or
                                     supplement’’ the laws in question.
                                        Respondent contends that ‘‘[t]he Court need look no further
                                     than the plain language of the Totalization Agreement to
                                     reach the conclusion that the CSG and CRDS are covered
                                     taxes.’’ In respondent’s view, the terms ‘‘amend’’ and ‘‘supple-
                                     ment’’ have a plain meaning that is readily ascertainable by
                                     using dictionaries and related tools. Petitioners have not pro-
                                     vided the Court with a definition of either term that directly
                                     supports their position. Rather, they contend that article 2(3)
                                     cannot have a ‘‘plain meaning’’ because the Totalization
                                     Agreement has been ‘‘interpreted by the French authorities
                                     to lead to precisely the opposite result’’ of that urged by
                                     respondent. In effect, petitioners contend that later-enacted
                                     laws ‘‘amend or supplement’’ the specified laws only if the
                                     new laws ‘‘accord with [the] traditional definition of social
                                     security taxes.’’
                                        On this point we agree with respondent. The words
                                     ‘‘amend’’ and ‘‘supplement’’ are terms of potentially broad
                                     scope in U.S. jurisprudence. Had the signatories desired to
                                     limit covered taxes in the manner petitioners suggest, the
                                     signatories could have so provided in article 2(3) or by com-
                                     parable provision in the definitional article. They did not do
                                     so. Rather, they defined ‘‘applicable taxes’’ for purposes of the
                                     Totalization Agreement to include ‘‘legislation that amends
                                     or supplements’’ the eight enumerated categories of French
                                     laws. It is certainly possible for a new law to amend or to
                                     supplement the specified laws without itself being a ‘‘tradi-
                                     tional * * * social security tax[ ].’’ The fact that French offi-
                                     cials at times have taken the position that CSG and CRDS
                                     are not covered by the Totalization Agreement is not disposi-
                                     tive, especially because the terms ‘‘supplement’’ and ‘‘amend’’




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                                     must here be interpreted according to U.S., rather than
                                     French, legal principles.
                                         The verb ‘‘amend’’ is defined to mean ‘‘formally alter (a
                                     statute, constitution, motion, etc.) by striking out, inserting,
                                     or substituting words.’’ Black’s Law Dictionary 94 (9th ed.
                                     2009). The verb ‘‘supplement’’ means ‘‘provide or form a
                                     supplement,’’ and the noun ‘‘supplement’’ is defined to mean
                                     ‘‘[s]omething added to complete a thing, make up for a defi-
                                     ciency, or extend or strengthen the whole.’’ American Herit-
                                     age Dictionary 1739 (4th ed. 2000); see Webster’s New World
                                     Dictionary 1430 (2d coll. ed. 1980) (defining the verb ‘‘supple-
                                     ment’’ to mean ‘‘provide a supplement to; add to, esp. to
                                     make up for a lack or deficiency’’); Webster’s New World Col-
                                     lege Dictionary 1438 (4th ed. 2010) (same); Black’s Law Dic-
                                     tionary 1577 (defining ‘‘supplemental’’ to mean ‘‘[s]upplying
                                     something additional; adding what is lacking’’).
                                         We will adopt the ordinary, contemporary understanding of
                                     these words for purposes of our analysis. 6 We must accord-
                                     ingly determine whether CSG and CRDS amended or supple-
                                     mented the specified French social security laws by (1) for-
                                     mally altering one or more of these laws by striking out,
                                     inserting, or substituting words; (2) adding something to
                                     make up for a lack or deficiency in one or more of these laws;
                                     or (3) adding something to extend or strengthen the French
                                     social security system as a whole.
                                           B. The French Social Security System, CSG, and CRDS
                                       The following summary of French law derives from the
                                     affidavits of the parties’ expert witnesses, the parties’ memo-
                                     randa, and the accompanying primary sources. Under French
                                     law, social security is based on the principle of national soli-
                                     darity. The social security system is designed to provide
                                       6 Of the 24 totalization agreements currently in force between the United

                                     States and other countries, 18 contain terms similar to the ‘‘amends or
                                     supplements’’ clause in article 2(3). France, in its totalization agreements
                                     with other countries, generally uses the words ‘‘amends’’ and ‘‘extends’’ for
                                     the same purpose. See Agreement on Social Security, Fr.-Ind., July 30,
                                     2008, art. 2(2). We have been unable to find any instance in U.S. law
                                     where ‘‘amend or supplement’’ is treated as a verbal collocation with an
                                     unusual or unique significance or as a specialized term of art. We accord-
                                     ingly look to the plain meaning of each verb separately in its ordinary
                                     sense.




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                                     protection for French workers, French residents, and their
                                     families against risks of any nature likely to reduce or limit
                                     their earning capacity. The eight categories of laws enumer-
                                     ated in article 2(1)(b) of the Totalization Agreement con-
                                     stitute the bulk of the French social security system. The
                                     benefits provided by these laws cover illness (work-related or
                                     not), occupational accidents, maternity and paternity,
                                     increases in family costs, disability, old age, and death, with
                                     specialized coverage for particular industries and professions.
                                        The French social security system is financed through
                                     national insurance contributions paid by employers and
                                     workers and through taxation and earmarked charges. Social
                                     security contributions are generally calculated on a percent-
                                     age of the worker’s gross income. Contributions are withheld
                                     at the source by employers and paid directly by self-employed
                                     individuals.
                                        The legal retirement age in France varies from 52 to 62
                                     depending on one’s occupation. The retirement benefit
                                     received depends upon average annual earnings (25 highest
                                     earning years), the payment rate (between 27.5% and 50%),
                                     and the total period of insurance, which is calculated in cal-
                                     endar quarters. To receive the full payment rate (50%), a
                                     participant must have accumulated a total period of insur-
                                     ance of at least 160 calendar quarters.
                                        France has a dedicated bureaucracy consisting of
                                     numerous public entities that coordinate the provision of
                                     social security benefits. These include the Central Agency for
                                     Financial Entities (ACOSS), a public agency charged with
                                     managing the cashflows of numerous social security funds.
                                     ACOSS monitors private entities responsible for the collec-
                                     tion of social security contributions and family allowances
                                     (URSSAF) and also acts to ensure the uniform interpretation
                                     of the laws and regulations these entities apply.
                                        The CSG law was enacted in December 1990 and is cur-
                                     rently codified in the French Social Security Code (CSS),
                                     which includes most provisions governing social security
                                     benefits in France. See Code de la Se´curite´ Sociale, Articles
                                     L136–1 et seq. CSG is assessed annually at a rate of 7.5%
                                     on most employment income; at a rate of 8.2% on income
                                     from property and financial investments (including capital
                                     gains and income from life annuities); and at a rate of 6.6%
                                     on income received in connection with retirement or dis-




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                                     (197)                           ESHEL v. COMMISSIONER                                        211


                                     ability. Approximately two-thirds of CSG assessed on
                                     employment income is a deductible expense for purposes of
                                     computing the French individual income tax. In 2012, CSG
                                     was extended to apply to capital gains from the sale of
                                     French real property by non-French residents.
                                        CSG on employment income is withheld by the employer in
                                     the same manner as other social security taxes and appears
                                     on the employee’s pay stub as a social contribution.
                                     Employers remit CSG directly to URSSAF, the entities
                                     responsible for collection of French social security contribu-
                                     tions generally. CSG is collected on passive income by with-
                                     holding at the source with respect to French-source income
                                     and is otherwise reported on the individual’s personal tax
                                     return.
                                        Initially, all proceeds from CSG were allocated to the
                                     National Family Allowances Fund, which is directly linked to
                                     French laws on family benefits (one of the eight enumerated
                                     categories of laws in article 2(1)(b) of the Totalization Agree-
                                     ment). The CSG law was subsequently amended, directing a
                                     portion of CSG revenues into two other funds directly linked
                                     to the social security system (compulsory health schemes and
                                     the Old-Age Solidarity Fund). This amendment also directed
                                     a variable, but apparently small, portion of CSG into the
                                     National Solidarity Fund for Autonomy, which supports the
                                     elderly and disabled, and a fund dedicated to retirement of
                                     debt incurred by the French social security system, described
                                     more fully below. 7
                                        The CRDS law was enacted in January 1996 and is not
                                     codified. CRDS is assessed annually at a rate of 0.5% on the
                                     same base as CSG, expanded slightly to include certain cat-
                                     egories of income that are otherwise exempt from tax (e.g.,
                                     proceeds from the sale of art, jewelry, antiques, and collec-
                                     tor’s items). CRDS is withheld and collected in the same
                                     manner as CSG and is a nondeductible expense in computing
                                     the French individual income tax.
                                       7 Petitioners’ expert did not opine on the percentage of CSG that goes

                                     into each specific fund. At oral argument, petitioner’s counsel represented
                                     that the percentage varied from year to year, but that the amount allo-
                                     cated to the National Solidarity Fund for Autonomy and the social security
                                     debt reduction fund is not less than 0.1% ‘‘and it’s not 50[%]. It’s sort of
                                     a variable amount.’’




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                                        All CRDS proceeds, and a portion of CSG proceeds as men-
                                     tioned above, go to the Caisse d’Amortissement de la Dette
                                     Sociale (Social Debt Redemption Fund or CADES). CADES is
                                     administered by a public body under the joint supervision of
                                     the Minister for Social Security and the Minister for the
                                     Economy and Finance. The primary purpose of CADES is to
                                     discharge debt incurred to fund French social security pro-
                                     grams. Most or all of this debt was contracted by ACOSS, the
                                     public agency responsible for managing the cashflows of
                                     France’s various social security funds. ACOSS incurred this
                                     debt to finance the deficits accumulated by the French social
                                     security system during 1994 and 1995 and to finance the sys-
                                     tem’s predicted deficit for 1996.
                                        CSG and CRDS do not create any new category of bene-
                                     ficiary under the French social security system. By paying
                                     these taxes, individuals do not become entitled to additional
                                     or increased benefits under any French social security law.
                                     Neither CSG nor CRDS provides a ‘‘period of coverage’’ sepa-
                                     rate from or in addition to the ‘‘period of coverage’’ that an
                                     individual accrues by being employed in France and paying
                                     the French social security taxes he would otherwise pay. In
                                     effect, CSG and CRDS put into place a pair of tax increases
                                     that left the benefit structure the same as it was previously.
                                           C. Analysis
                                           1. Plain Meaning of Article 2(1)(b)
                                        We agree with respondent that CSG and CRDS are covered
                                     by, or within the scope of, the Totalization Agreement
                                     because they ‘‘amend or supplement’’ the French social secu-
                                     rity laws specified in article 2(1)(b). CSG and CRDS are both
                                     administered by French social security officials. These taxes
                                     are collected in the same manner as French social security
                                     taxes. In the case of employees, these taxes are collected by
                                     URSSAF, the entities responsible for collecting French social
                                     security charges generally. The URSSAF entities are mon-
                                     itored by ACOSS, the public entity in charge of managing
                                     cashflows for France’s social security funds. As a rule CSG
                                     and CRDS are imposed only on persons who otherwise
                                     participate in the French social security system. In 2001 the
                                     French Government amended the social security code to pro-
                                     vide that CSG and CRDS are payable only by individuals




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                                     (197)                           ESHEL v. COMMISSIONER                                        213


                                     who are covered by a compulsory French sickness insurance
                                     scheme. See Code de la Se´curite´ Sociale, Article L136–1. The
                                     compulsory French sickness insurance scheme is one of the
                                     eight categories of social security laws enumerated in article
                                     2(1)(b). 8
                                        These facts make it clear that CSG and CRDS are part of
                                     the French social security system in a practical sense. More
                                     specifically, these two taxes ‘‘amend or supplement’’ the laws
                                     that make up this system. CSG is codified in the CSS, which
                                     includes most provisions governing social security benefits in
                                     France. CSG thus ‘‘amends’’ the French social security laws
                                     by adding words to the relevant statute.
                                        CSG and CRDS also ‘‘supplement’’ the French social secu-
                                     rity laws in two ways. Both taxes were enacted to address
                                     systemic funding shortfalls in the French social security
                                     system. The bulk of CSG revenues is directed into funds that
                                     directly support the payment of benefits under one or more
                                     social security laws enumerated in article 2(1)(b). The bal-
                                     ance of CSG revenues, and all of CRDS revenues, is used to
                                     discharge debt incurred by ACOSS to fund social security
                                     benefits. In ascertaining whether CSG and CRDS ‘‘supple-
                                     ment’’ French social security laws, we see no meaningful
                                     distinction between paying off debt incurred by French social
                                     security programs and paying money into those program
                                     funds directly. In either event, the new taxes ‘‘supplement’’
                                     the specified French social security laws by ‘‘making up for
                                     a deficiency’’ in them or by ‘‘strengthening’’ them.
                                           2. European Court of Justice Cases
                                       The European Court of Justice (ECJ) has issued several
                                     rulings regarding the proper characterization of CSG and
                                     CRDS for purposes of European Union (EU) law. While not
                                     binding on us, the decisions of an international court are
                                     entitled to respectful consideration. See Sanchez-Llamas, 548
                                     U.S. at 333.
                                       8 The general rule stated in the text is now subject to an exception, cre-

                                     ated by the 2012 amendment that made CSG and CRDS applicable to
                                     gains realized on the sale of French real property by non-French residents.
                                     Typically, non-French residents would not be covered by the compulsory
                                     French sickness insurance scheme and would not be participating (for that
                                     year anyway) in the French social security system.




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                                         In two cases decided in February 2000, the ECJ was called
                                     upon to decide whether France, consistently with EU regula-
                                     tions, could impose CSG and CRDS on French residents who
                                     worked in, and paid social security taxes to, another EU
                                     member state. See Case C–169/98, Comm’n v. France, 2000
                                     E.C.R. I–1052; Case C–34/98, Comm’n v. France, 2000 E.C.R.
                                     I–1028. In order to protect constitutional freedoms to move
                                     and work in any member state, EU regulations provide that
                                     citizens of one state cannot be required to pay social security
                                     contributions to two different states for the same period of
                                     work. See Regulation No. 1408/71, 1971 O.J. (L 149) 2. Gen-
                                     erally, social contributions may be imposed only by the
                                     member state in which the individual is employed.
                                         The EU Commission commenced an investigation and
                                     determined that, by levying CSG and CRDS on the wages of
                                     French residents who worked in another member state,
                                     France violated Regulation No. 1408/71 by imposing social
                                     charges on income that had already borne social charges in
                                     that other state. The French authorities disagreed, con-
                                     tending (among other things) that CSG and CRDS are not
                                     social charges because the individuals subject to these taxes
                                     do not receive any additional benefits by virtue of paying
                                     these taxes. The cases were brought to the ECJ for resolution
                                     of this dispute.
                                         The ECJ ruled against France, holding that CSG and
                                     CRDS are social charges under EU law. The Court ruled that
                                     ‘‘[t]he fact that a levy is categorized as a tax under national
                                     legislation does not mean that, as regards Regulation No.
                                     1408/71, that same levy cannot be regarded as falling within
                                     the scope of that regulation and caught by the prohibition
                                     against overlapping legislation.’’ Case C–34/98, 2000 E.C.R.
                                     at I–1041. According to the ECJ, the dispositive question is
                                     whether there is a direct and sufficiently relevant link
                                     ‘‘between the provision in question and the legislation gov-
                                     erning the branches of social security.’’ The Court concluded
                                     that CSG and CRDS each had a sufficiently direct link to the
                                     French social security system.
                                         As regards CSG, the ECJ determined that this tax ‘‘is allo-
                                     cated specifically and directly to financing social security in
                                     France.’’ Case C–169/98, 2000 E.C.R. at I–1066. The link
                                     between CSG and the French social security system, the
                                     court found, ‘‘is also clearly revealed by the fact that, as the




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                                     (197)                           ESHEL v. COMMISSIONER                                        215


                                     French Government itself asserts, the levy replaces in part
                                     social security contributions which were a heavy burden on
                                     low and medium levels of pay, and means that an increase
                                     in existing contributions can be avoided.’’ Ibid. As regards
                                     CRDS, the court determined that this tax ‘‘is in part
                                     designed to discharge a debt of the social security scheme
                                     caused by the financing of benefits paid out in the past.’’
                                     Case C–34/98, 2000 E.C.R. at I.1042–1043. These links to the
                                     French social security system, the court concluded, were
                                     sufficient to characterize both CSG and CRDS as social
                                     charges. 9
                                        The ECJ concluded that CSG and CRDS are social charges
                                     because they are directly linked to the French social security
                                     system. The purpose of these taxes was to finance the French
                                     social security system, and the proceeds of these taxes fund
                                     the payment of social security benefits or retire debt incurred
                                     to pay social security benefits. While we are not bound by
                                     ECJ opinions, its conclusion that CSG and CRDS are social
                                     charges, and its reasoning in support of that conclusion,
                                     directly support our determination that CSG and CRDS
                                     ‘‘amend or supplement’’ the French social security laws.
                                           D. Petitioners’ Arguments
                                        Petitioners agree that CSG ‘‘was a new tax codified in the
                                     French Social Security Code’’; that CSG and CRDS were
                                     ‘‘expressly imposed upon participants in the French Social
                                     Security program’’; and that these taxes ‘‘funded (to some
                                     degree) the French Social Security Programs.’’ Petitioners
                                        9 Petitioners note that, under article 2(4), ‘‘applicable laws’’ for purposes

                                     of the Totalization Agreement do not include EU regulations. That is cor-
                                     rect, but immaterial. The question is whether CSG and CRDS are ‘‘applica-
                                     ble laws’’ by virtue of ‘‘amending or supplementing’’ the French social secu-
                                     rity system. Nothing in the Totalization Agreement prevents us from con-
                                     sidering ECJ decisions persuasive as to the proper characterization of CSG
                                     and CRDS, and we will grant these opinions respectful consideration. Peti-
                                     tioners also note that the ECJ, in finding a sufficient ‘‘link,’’ relied in part
                                     on ‘‘the specific allocation of the CSG and CRDS to fund the French social
                                     security system.’’ According to petitioners, ‘‘[t]he concept of specific alloca-
                                     tion of tax receipts to a social security system * * * is not the criterion
                                     at stake here.’’ We disagree. The specific allocation of taxes to fund the
                                     French social security system is one highly relevant factor in determining
                                     whether CSG and CRDS ‘‘amend or supplement’’ the specified social secu-
                                     rity laws.




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                                     advance three main arguments as to why CSG and CRDS
                                     nevertheless are not covered by the Totalization Agreement.
                                     We address these arguments in turn.
                                           1. Tax Base
                                        Petitioners contend that the tax base on which CSG and
                                     CRDS are imposed shows that they are not ‘‘social security
                                     taxes within the definition of the French Totalization Agree-
                                     ment.’’ Petitioners note that CSG and CRDS ‘‘apply to
                                     unearned income.’’ In 2012, moreover, these taxes were
                                     extended to apply to gains realized by nonresidents of France
                                     on the sale of French real property. Under the Totalization
                                     Agreement and comparable EU regulations, France is not
                                     supposed to impose social security taxes on U.S. or EU citi-
                                     zens unless they are employed in France. Thus, by extending
                                     CSG and CRDS to sales of property by nonresidents, France
                                     has expressed, according to petitioners, its understanding
                                     that CSG and CRDS are not social security taxes.
                                        We reject these arguments. First, the relevant question
                                     under the Totalization Agreement is not whether CSG and
                                     CRDS are ‘‘social security taxes,’’ but whether they ‘‘amend
                                     or supplement’’ the specified social security laws. As noted
                                     supra p. 208, a new law can ‘‘amend or supplement’’ the
                                     enumerated laws without necessarily imposing a social secu-
                                     rity tax in its own right.
                                        Second, the fact that a tax is imposed on unearned income,
                                     including income from sales of property, has little if any
                                     bearing on whether it is a ‘‘social security tax’’ or on whether
                                     it ‘‘amends or supplements’’ social security laws. A sovereign
                                     state is free to impose a social security tax on whatever tax
                                     base it thinks proper.
                                        Third, we give little weight to the 2012 amendment. In
                                     assessing the character of the taxes at issue, we will not let
                                     the tail wag the dog. The revenue derived by extending CSG
                                     and CRDS to sales of real property by nonresidents appears
                                     to be trivial when compared with the revenue raised by these
                                     taxes generally. If substantially all the proceeds of a tax are
                                     consistent with its character as a social charge, a trivial
                                     anomaly is the exception that proves the rule. Moreover, the
                                     tax years before the Court are 2008 and 2009. In assessing
                                     the character of CSG and CRDS for the years at issue, we
                                     decline to give weight to postenacted legislation. Finally, the




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                                     (197)                           ESHEL v. COMMISSIONER                                        217


                                     thrust of petitioners’ argument is that the 2012 amendment
                                     shows that the French Government regards CSG and CRDS
                                     as income taxes and not social security taxes. As noted
                                     above, the ECJ has rejected France’s position and ruled that
                                     these taxes are social charges under EU law. See supra pp.
                                     214–215. And as we discuss infra pp. 222–225, France’s
                                     treatment of these levies as income taxes for purposes of
                                     French domestic law does not control our decision as to
                                     whether they ‘‘amend or supplement’’ the laws specified in
                                     the Totalization Agreement.
                                           2. ‘‘Period of Coverage’’ or ‘‘Benefit’’
                                        SSA section 317(b) provides that foreign taxes paid ‘‘in
                                     accordance with’’ the terms of a totalization agreement shall
                                     not be creditable ‘‘[n]otwithstanding any other provision of
                                     law.’’ We have determined that petitioners paid CSG and
                                     CRDS ‘‘in accordance with’’ the Totalization Agreement and
                                     hence that no credit is available. Petitioners contend that we
                                     must go further. According to petitioners, SSA section
                                     317(b)(4) precludes a credit only if the taxpayer receives a
                                     ‘‘period of coverage’’ for the specific foreign tax paid. Since a
                                     totalization agreement is ‘‘designed to totalize ‘periods of cov-
                                     erage,’ the clear implication of the SSA § 317(b)(4) disallow-
                                     ance,’’ according to petitioners, ‘‘is that it applies only when
                                     the payment of tax gives rise to a period of coverage.’’
                                        Petitioners offer no textual support for this argument, and
                                     we find no such ‘‘implication’’ in the statute or its legislative
                                     history. Nothing in SSA section 317(b)(4) links the preclusion
                                     of a credit to an individual’s receiving a ‘‘period of coverage.’’
                                     Petitioners cite the definition of ‘‘period of coverage’’ in
                                     article 1(6) of the Totalization Agreement and try to link the
                                     word ‘‘laws’’ in that definition to the ‘‘laws’’ covered under
                                     article 2, which lists the applicable U.S. and French social
                                     security laws. This argument is flawed. The fact that a
                                     ‘‘period of coverage’’ can be provided only by laws specified in
                                     article 2 does not mean that every law specified in article 2
                                     must provide the taxpayer with a distinct ‘‘period of cov-
                                     erage.’’ Petitioners similarly try to establish a link with arti-
                                     cles 12 and 13, which coordinate periods of coverage. But
                                     these articles likewise do not require that each tax specified
                                     in article 2 provide the taxpayer with a distinct ‘‘period of




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                                     218                  142 UNITED STATES TAX COURT REPORTS                                     (197)


                                     coverage.’’ They simply coordinate benefits when the req-
                                     uisite ‘‘periods of coverage’’ exist.
                                       In any event, the provision that determines the allow-
                                     ability of a credit here is SSA section 317(b)(4), and nothing
                                     in that statute supports petitioners’ argument. Petitioners
                                     would have us ignore the statute’s plain meaning and inter-
                                     pret ‘‘in accordance with’’—in the absence of any statutory
                                     language or legislative history pointing us in that direction—
                                     to mean ‘‘in a manner that affords the taxpayer a period of
                                     coverage under a foreign social security law.’’ Like the court
                                     in Erlich, we decline to give ‘‘in accordance with’’ such an
                                     idiosyncratic meaning. If Congress had intended to limit
                                     credit preclusion to situations where the taxpayer obtained a
                                     distinct period of coverage under the foreign social security
                                     system by paying the tax at issue, Congress could easily have
                                     drafted the statute to say this. The legislative history sug-
                                     gests no such intent, because it refers to the desirability of
                                     coordinating the U.S. and foreign ‘‘social security systems,’’
                                     not to the desirability of ensuring that U.S. taxpayers derive
                                     a benefit from paying a particular foreign tax. See H.R. Rept.
                                     No. 95–702 (Part 1), supra at 10–11, 1997 U.S.C.C.A.N. at
                                     4167–4168. 10
                                           10 The
                                               Court of Federal Claims’ opinion in Erlich, by analogy, supports
                                     rejection of petitioners’ argument here. The taxpayer in Erlich worked for
                                     a non-U.S. employer in France. Because he was not liable for U.S. social
                                     security tax, there was no risk of double taxation. On the facts of that case,
                                     therefore, the Totalization Agreement did not operate to effect Congress’
                                     first purpose in providing for such agreements—the elimination of double
                                     taxation—and the taxpayer argued that SSA section 317(b)(4) should not
                                     preclude a credit in such circumstances. The court in Erlich rejected this
                                     argument, holding in effect that ‘‘in accordance with’’ does not mean ‘‘in
                                     a manner that accomplishes a specific purpose of.’’ See Erlich, 104 Fed. Cl.
                                     at 17. Here, petitioners focus on Congress’ second purpose in providing for
                                     totalization agreements—the coordination of benefits. Because CSG and
                                     CRDS do not provide ‘‘periods of coverage,’’ petitioners argue that there are
                                     no distinct periods of coverage to coordinate; that the Totalization Agree-
                                     ment therefore does not operate to effect Congress’ second purpose in pro-
                                     viding for such agreements; and that SSA section 317(b)(4) should not pre-
                                     clude a credit in these circumstances. Like the court in Erlich, we decline
                                     to hold that ‘‘in accordance with’’ means ‘‘in a manner that accomplishes
                                     a specific purpose of.’’ It is immaterial whether one of Congress’ stated
                                     purposes is fully realized on a particular set of facts. Our focus is on the
                                     language of the statute, and we will not override its plain meaning.




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                                     (197)                           ESHEL v. COMMISSIONER                                        219


                                        Besides lacking textual support, petitioners’ argument has
                                     little to recommend it in common sense or policy terms. Peti-
                                     tioners paid various social security taxes to France during
                                     2008–09 and thereby accrued a French ‘‘period of coverage’’
                                     of eight calendar quarters. Obviously, petitioners could not
                                     possibly accrue an additional ‘‘period of coverage’’ for that
                                     two-year period. In both the United States and France, social
                                     security benefits are based on the period of employment
                                     during which a person pays social security taxes, not on the
                                     total amount of taxes paid. If France had amended its social
                                     security laws to increase the tax rate, and if petitioners had
                                     paid that increased tax during 2008–09, they would have
                                     derived no benefit in terms of increased entitlement and
                                     would have accrued no ‘‘period of coverage’’ distinct from the
                                     two-year period of coverage they were already accruing. But
                                     that amendment would indisputably ‘‘amend or supplement’’
                                     the French social security laws specified in article 2(1)(b).
                                     The same principle applies here: There is an additional tax
                                     but no additional benefit. In determining whether a new law
                                     ‘‘amends or supplements’’ the French social security laws, it
                                     simply does not matter whether taxpayers derive a benefit by
                                     paying the additional tax. 11
                                           3. Postratification Understandings of the Signatories
                                          Because a treaty is an agreement among sovereign powers,
                                     ‘‘ ‘the postratification understanding’ ’’ of the signatory
                                     nations may assist in interpreting it. Medellı´n v. Texas, 552
                                     U.S. 491, 507 (2008) (quoting Zicherman v. Korean Air Lines
                                     Co., 516 U.S. 217, 226 (1996)). The parties’ conduct may evi-
                                     dence their understanding of the agreement they signed, and
                                     their postratification practice may thus shed light on the
                                     treaty’s proper interpretation. See Trans World Airlines, Inc.
                                       11 In its February 2000 opinion, the ECJ rejected France’s argument that

                                     CSG and CRDS are not social charges because the individuals who pay
                                     these taxes do not thereby accrue any additional benefits. The ECJ noted
                                     that CSG and CRDS effected a tax increase on upper-income people, with-
                                     out any correlative increase in benefits, to avoid burdening lower and mid-
                                     dle-income people. See Case C–169/98, 2000 E.C.R. at I–1066 (‘‘[A]s the
                                     French Government itself asserts, the [CSG] levy replaces in part social se-
                                     curity contributions which were a heavy burden on low and medium levels
                                     of pay, and means that an increase in existing contributions can be avoid-
                                     ed.’’).




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                                     220                 142 UNITED STATES TAX COURT REPORTS                                     (197)


                                     v. Franklin Mint Corp., 466 U.S. 243, 259 (1984). To deter-
                                     mine postratification practice, we look to the actual practice
                                     of the political arms of both nations.
                                           a. Position of the United States
                                       ‘‘Respect is ordinarily due the reasonable views of the
                                     Executive Branch concerning the meaning of an international
                                     treaty,’’ El Al Israel Airlines, Ltd. v. Tseng, 525 U.S. 155, 168
                                     (1999), but respect is not the same as uncritical acceptance,
                                     see N.W. Life Assurance Co. of Can., 107 T.C. at 380. Indeed,
                                     the Supreme Court has noted that ‘‘ ‘courts interpret treaties
                                     for themselves,’ ’’ so that the construction adopted by Govern-
                                     ment agencies is not necessarily conclusive. Id. at 380–381
                                     (quoting Kolovrat v. Oregon, 366 U.S. 187, 194 (1961)). The
                                     deference afforded depends upon the degree to which the
                                     interpretation proffered by the Government is reasonable and
                                     consistent with what appear to be the circumstances sur-
                                     rounding the convention. Id. at 381.
                                       The U.S. Government has consistently regarded CSG and
                                     CRDS as covered by the Totalization Agreement. In February
                                     1997 the U.S. Embassy in Paris wrote the French Minister
                                     of Social Affairs and Employment to complain about France’s
                                     application of CSG and CRDS to so-called detached U.S.
                                     workers in France. Under the ‘‘detached worker’’ rule, an
                                     individual sent from one nation to another to work for a rel-
                                     atively short time—up to five years under the Totalization
                                     Agreement, article 6(1)—may elect to be covered exclusively
                                     by the social security system of the sending nation. Thus, a
                                     U.S. detached worker in France is typically exempt from
                                     French social charges.
                                       In the February 1997 letter, the United States argued that
                                     the French Government could not properly levy CSG or
                                     CRDS against detached U.S. workers who, under the Total-
                                     ization Agreement, are excluded from paying French social
                                     security taxes. The letter took the position that CSG and
                                     CRDS are covered by the Totalization Agreement and that
                                     the application of these taxes to employees temporarily in
                                     France ‘‘constitutes a pure and simple violation’’ of that
                                     agreement. Letter from Donald K. Bandler, Embassy of the
                                     United States of America, to Jacques Barrot, Minister of
                                     Social Affairs and Employment, French Government (Feb-
                                     ruary 20, 1997).




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                                     (197)                           ESHEL v. COMMISSIONER                                        221


                                        Respondent has also provided the Court with a declaration
                                     from Vance Teel, the Acting Associate Commissioner for the
                                     Office of International Programs, Social Security Administra-
                                     tion. The Office of International Programs represents the
                                     agency in negotiating international social security agree-
                                     ments, formulating policies concerning program operations
                                     outside the United States, and issuing certificates of coverage
                                     for U.S. detached workers. Mr. Teel declared: ‘‘Based on
                                     information available to me and to the best of my under-
                                     standing and belief, * * * [the Social Security Administra-
                                     tion] considers the French * * * (CSG) and * * * (CRDS) to
                                     be covered by the * * * [Totalization Agreement].’’
                                        The Embassy letter and the Teel declaration clearly state
                                     a position consistent with that adopted by the IRS in this
                                     litigation. However, neither document explains the basis for
                                     the Government’s position in detail. Thus, while we find
                                     these statements helpful, we do not regard them as entitled
                                     to ‘‘great weight.’’ Cf. Sumitomo Shoji Am., Inc. v. Avagliano,
                                     457 U.S. 176, 184–185 (1982) (‘‘Although not conclusive, the
                                     meaning attributed to treaty provisions by the Government
                                     agencies charged with their negotiation and enforcement is
                                     entitled to great weight.’’). We accept these documents as
                                     enunciating the postratification understanding of the United
                                     States concerning the status of CSG and CRDS as taxes cov-
                                     ered by the Totalization Agreement.
                                           b. Position of the French Government
                                        The Government of France does not appear to have taken
                                     a definitive position as to whether CSG and CRDS are cov-
                                     ered by the Totalization Agreement. Petitioners’ and
                                     respondent’s experts concur that there is no French judicial
                                     or administrative precedent that explicitly addresses this
                                     question. Petitioners cite certain court cases, governmental
                                     materials, and administrative practice as evidence of
                                     France’s postratification understanding. But these materials
                                     are susceptible to different inferences; they do not yield an
                                     unambiguous position as to France’s interpretation of the
                                     Totalization Agreement. In any event, while we may give
                                     weight to the interpretation adopted by a treaty partner, we
                                     are not bound by it. See Karaha Bodas Co., L.L.C. v.
                                     Perusahaan Pertambangan Minyak Dan Gas Bumi Negara
                                     (‘‘PERTAMINA’’), 313 F.3d 70, 92 (2d Cir. 2002); United




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                                     222                 142 UNITED STATES TAX COURT REPORTS                                     (197)


                                     States v. A.L. Burbank & Co., 525 F.2d 9, 15 (2d Cir. 1975)
                                     (holding that Canadian interpretation of tax treaty between
                                     United States and Canada is not determinative in U.S.
                                     courts); cf. Iceland Steamship Co. Eimskip v. U.S. Dep’t of the
                                     Army, 201 F.3d 451, 458 (D.C. Cir. 2000) (deference to an
                                     agency’s determination of a treaty term is eroded ‘‘where an
                                     agency and another country disagree on the meaning of a
                                     treaty’’).
                                        Respondent contends that two agencies of the French
                                     Government—ACOSS and URSSAF, the agencies tasked
                                     with collecting social security taxes and distributing social
                                     security proceeds—have recognized that CSG and CRDS are
                                     covered by the Totalization Agreement. Some background is
                                     necessary to understand respondent’s position. Before 2000,
                                     France levied CSG and CRDS against U.S. detached workers.
                                     (This was the subject of the U.S. Embassy’s protest letter.
                                     See supra pp. 220–221). If CSG and CRDS were covered by
                                     the Totalization Agreement, France should not have sub-
                                     jected detached workers to these taxes. The French Govern-
                                     ment changed its position in 2000, after the ECJ issued its
                                     opinions holding that CSG and CRDS are social charges. See
                                     supra pp. 213–215. France that year amended its social secu-
                                     rity code to limit the application of CSG and CRDS to
                                     individuals who are covered by the compulsory French sick-
                                     ness insurance scheme, i.e., to French residents who are not
                                     detached workers.
                                        Respondent bases his argument on two letters, one from
                                     ACOSS and one from URSSAF. According to respondent,
                                     these letters evidence the French Government’s under-
                                     standing that CSG and CRDS are covered by the Totalization
                                     Agreement. Petitioners draw a different inference from these
                                     letters—namely, that detached workers are exempt from
                                     CSG and CRDS, not by virtue of the Totalization Agreement,
                                     but by virtue of the 2000 domestic law change. On balance,
                                     we do not find these letters to be helpful in discerning the
                                     French Government’s position one way or the other.
                                        Petitioners cite several French judicial decisions that have
                                     characterized CSG and CRDS as income taxes—‘‘taxes of any
                                     kind’’—as opposed to social security contributions, for pur-
                                     poses of French domestic law. See Conseil consitutionnel
                                     (Constitutional Court), 2000–442 DC (December 2000);
                                     Conseil consitutionnel, 90–285 DC (December 1990). In




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                                     (197)                           ESHEL v. COMMISSIONER                                        223


                                     France, the legislative procedures for enacting income taxes
                                     and social security contributions differ. In these cases, the
                                     French courts were asked to decide whether CSG and CRDS
                                     were income taxes or social charges for the purpose of deter-
                                     mining whether the Government had followed proper proce-
                                     dures when enacting the laws.
                                        The courts concluded that CSG and CRDS are income
                                     taxes because neither gives rise to any social benefit, and
                                     hence that CSG and CRDS were properly enacted under the
                                     legislative procedure applicable to ‘‘taxes of any kind.’’ This
                                     holding as to domestic French law does not control our deter-
                                     mination whether CSG and CRDS ‘‘amend or supplement’’
                                     the French laws specified in the Totalization Agreement.
                                     Indeed, the ECJ in 2000 held that CSG and CRDS are ‘‘social
                                     charges’’ under EU law notwithstanding their characteriza-
                                     tion as ‘‘taxes’’ for French domestic purposes. See Case C–34/
                                     98, 2000 E.C.R. at I–1041 (‘‘The fact that a levy is cat-
                                     egorized as a tax under national legislation does not mean
                                     that, as regards Regulation No. 1408/71, that same levy
                                     cannot be regarded as * * * [a social charge] within the
                                     scope of that regulation[.]’’).
                                        Finally, petitioners cite France’s position concerning the
                                     status of CSG and CRDS under the U.S.-France income tax
                                     treaty. The French Government has issued several State-
                                     ments of Practice informing French taxpayers that CSG and
                                     CRDS are covered by the income tax treaty and hence are
                                     creditable taxes. That being so, petitioners contend that CSG
                                     and CRDS cannot simultaneously be covered by the Total-
                                     ization Agreement.
                                        We reject this argument. France’s view that CSG and
                                     CRDS are creditable taxes reflects its position that these
                                     levies are ‘‘income taxes’’ under domestic French law. As
                                     noted above, that position does not control our determination
                                     whether CSG and CRDS ‘‘amend or supplement’’ the speci-
                                     fied French laws within the meaning of the Totalization
                                     Agreement.
                                        In any event, even if CSG and CRDS are within the scope
                                     of the income tax treaty, they can simultaneously be covered
                                     by the Totalization Agreement. As noted earlier, it is
                                     common ground that CSG and CRDS meet the general cri-
                                     teria for creditability under section 901. But petitioners may
                                     claim a credit under the treaty only ‘‘[i]n accordance with the




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                                     224                  142 UNITED STATES TAX COURT REPORTS                                     (197)


                                     provisions and subject to the limitations of the law of the
                                     United States.’’ Convention for the Avoidance of Double Tax-
                                     ation and the Prevention of Fiscal Evasion With Respect to
                                     Taxes on Income and Capital, U.S.-Fr., art. 24(1)(a), Aug. 31,
                                     1994 (Income Tax Treaty), Tax Treaties (CCH) para. 3001.25
                                     at 75,029. Petitioners are not allowed a credit, either under
                                     section 901 or under the Income Tax Treaty, if SSA section
                                     317(b)(4) precludes such a credit. The question is not
                                     whether CSG and CRDS are covered by the Income Tax
                                     Treaty, but whether SSA section 317(b)(4) bars a credit ‘‘not-
                                     withstanding any other provision of law.’’ 12
                                       In sum, we find that the postratification understanding of
                                     the French Government, to the extent discernible, provides
                                     no meaningful support for petitioners’ position. Where, as
                                     here, the signatories take opposite stances on a question of
                                     treaty interpretation, the foreign partner’s view does not
                                     have controlling force. A.L. Burbank & Co., 525 F.2d at 15.
                                     Moreover, the French Government does not appear to have
                                     engaged in an independent analysis, as a matter of treaty
                                     interpretation, as to whether CSG and CRDS ‘‘amend or
                                     supplement’’—the French text reads ‘‘modifiant ou
                                     comple´tant’’—the laws specified in the Totalization Agree-
                                     ment. Rather, France’s position regarding the Agreement
                                     appears to be a corollary of its position that these taxes were
                                     properly enacted as ‘‘income taxes’’ under French domestic
                                     law.
                                           12 Petitioners
                                                        err in relying on the Department of the Treasury’s Tech-
                                     nical Explanation of the Income Tax Treaty, which states that the treaty
                                     ‘‘does not apply to social security taxes.’’ Department of the Treasury Tech-
                                     nical Explanation of the Convention for the Avoidance of Double Taxation
                                     With Respect to Taxes on Income, U.S.-Fr., Aug. 31, 1994, Tax Treaties
                                     (CCH) para. 3060, at 75, 253. If CSG and CRDS are covered by the Income
                                     Tax Treaty, petitioners argue, this passage suggests that they cannot be
                                     ‘‘social security taxes’’ and hence are not covered by the Totalization Agree-
                                     ment. We reject this argument for two reasons. First, the Department of
                                     the Treasury in this passage identifies the U.S. taxes, not the French
                                     taxes, that are subject to the Income Tax Treaty. In so doing, it simply
                                     tracks treaty language that defines covered U.S. taxes as ‘‘the Federal in-
                                     come taxes imposed by the Internal Revenue Code (but excluding social se-
                                     curity taxes).’’ Income Tax Treaty, art. 2(1)(a)(i). Second, the central ques-
                                     tion in this case is not whether CSG and CRDS are ‘‘social security taxes,’’
                                     but whether they ‘‘amend or supplement’’ the French laws specified in the
                                     Totalization Agreement.




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                                     (197)                           ESHEL v. COMMISSIONER                                        225


                                        French courts have recently held that CSG can be
                                     characterized as a social charge for purposes of the EU Regu-
                                     lations while simultaneously being characterized as an
                                     income tax for French domestic purposes. See Cour de cassa-
                                     tion (Supreme Court for Judicial Matters), No. 11–10762
                                     (May 31, 2012), Bulletin 2012, V, n° 166 (‘‘[W]hile the CSG
                                     falls within the category of ‘‘taxes of any kind’’ within the
                                     meaning * * * of the Constitution * * *, this contribution
                                     also has the nature of a social security contribution within
                                     the meaning * * * of the EU Regulation [1408/71] by virtue
                                     of its exclusive allocation to the funding of several social
                                     security regimes.’’). The French courts thus see no inconsist-
                                     ency in treating CSG and CRDS as income taxes for domestic
                                     purposes but as social charges for EU purposes. We similarly
                                     see no inconsistency in respecting the character of these
                                     levies as income taxes for French domestic purposes while
                                     holding that they nevertheless ‘‘amend or supplement’’ the
                                     French social security laws within the meaning of the Total-
                                     ization Agreement.
                                     IV. Conclusion
                                       SSA section 317(b)(4) disallows a credit for taxes paid to
                                     France ‘‘in accordance with’’ the U.S.-France Totalization
                                     Agreement. Petitioners paid CSG and CRDS ‘‘in accordance
                                     with’’ that agreement because those taxes ‘‘amend or supple-
                                     ment’’ the French social security laws enumerated in the
                                     agreement. Petitioners’ claimed credits for these taxes are
                                     thus barred. We will therefore grant respondent’s motion for
                                     summary judgment and deny petitioners’ motion.
                                                                     An appropriate order will be issued, and
                                                                   decision will be entered under Rule 155.

                                                                               f




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