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Reporting and Taxing Spanish Wages on US W-2

I have several expats that are still being paid in Spain, while their allowances are paid in the US along with remitting of the taxes. I've been reporting their Sp. wages each month by converting the Euro to USD when the wages are being paid. However, now they are trying to implement a new process where the expat writes a check to the company for the taxes (spanish wages) and the company turns around and pays the IRS on their behalf while reporting those taxes on their US W-2.
I don't see how this is feasible since I can't report, through payroll, federal income tax on a US W-2 without wages being reported. Also, is there a form that is submitted when the company is remitting the taxes on behalf of each expat? I guess the main question is; can this be done legally?

I am getting no direction from our corporate office in Spain and I want to ensure that I am keeping the US company in compliance with IRS.

Thank you,
Nan

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