Pine Gap Overview
Pine Gap is a high-security surveillance installation located in a remote outback region of Australia near the town of Alice Springs.
Formally known as the Joint Defence Facility Pine Gap and code-named “RAINFALL,” this base is essentially a massive, global surveillance center operated jointly by the governments of Australia and the United States. A similar installation, Menwith Hill Station, is located in the U.K. west of the city of York. Together, these facilities have the capability of monitoring electronic communications, military intelligence and data systems virtually anywhere on the planet.
Special provisions in the U.S. Tax Code and treaties between the U.S. and other countries apply to employees of defense contractors working overseas at installations such as Pine Gap. Because some employees were unaware of these provisions–or were possibly given bad tax advice–these employees may have overpaid hundreds, even thousands over dollars to the U.S. Treasury for decades.
In some cases, such workers may have known about these provisions, but were told that they were not allowed to take advantage of them. Furthermore, workers at military installations such as Pine Gap may have been denied their rights to privacy by being forced by their employers to disclose their tax returns.
What follows is a list of terms that private defense company employees working abroad should be familiar with.
FEIE
The Foreign Earned Income Exclusion is a provision that allows U.S. citizens working for a private company (such as defense contractors) or who are self-employed outside of the country to reduce their taxable income. The exclusion is not available to resident aliens unless they are from a country with which the U.S. has an income tax treaty. Currently, the maximum exclusion is $105,900 for an individual. Additionally, the taxpayer is allowed to exclude housing expenses of more than 16 percent of that amount, within certain limits.
In order to qualify for the FEIE, the taxpayer must either be a “bona fide” resident of a foreign country for a period of one calendar year, or physically present in one or more foreign countries for no less than 330 days within a calendar year. To claim the exclusion, qualified taxpayers must file IRS Form 2555 or 2555-EZ.
Special rules apply to those who work directly for the U.S. government, such as military and Foreign Service personnel.
Defense Contractors
These are defined as private, non-governmental companies and individuals providing services or manufacturing military grade weaponry and related technology. The ten largest defense contractors in the U.S. are:
- Lockheed Martin
- Boeing
- General Dynamics
- Raytheon
- Northrup Grumman
- Huntington-Ingalls Industries
- Bechtel
- Bae Systems
- L3 Technologies
- Leidos Holdings
Other defense contractors that may be involved in the Pine Gap operation include AECOM, E&M Technologies, Hewlett-Packard and IBM.
Disclosure Laws
Under most circumstances, federal law protects individuals’ tax returns from being disclosed to third parties by the IRS. Similarly, individuals cannot be legally compelled to disclose their tax returns to an employer or other third party, nor can an IRS employee share this information unless there is a legal reason to do so. These exceptions include investigations into alleged violations of tax or criminal law, or issues related to Social Security. These disclosure laws are covered under Section 6103 of the Internal Revenue Code.
