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  1. Thanks Rachel for the comment. You are right. Something in the distant past might be amenable to some creative work.

  2. Reading the ruling I’d disagree on the point that living outside the US for 40 years (in Burkina Faso or elsewhere) at this point would still subject a LPR to the tax laws (maybe only 29 yrs and some change).

    The court makes a point to discuss the somewhat inappropriately titled (considering the widening of the tax base in the legislation, a la Edict of Caracalla) Deficit Reduction Act of 1984 and it’s applicability to the US tax laws and Treasury Regulations, without explicitly stating in the dicta what a pre-January 1, 1985 LPR abandonment case might look like.

    Footnote 14 points out:

    “The committee believes that aliens who have entered the United States as permanent residents and who have not officially lost or surrendered the right to permanent U.S. residence should be taxable as U.S. residents. These persons have rights that are similar
    to those afforded [U.S.] citizens (including the right to enter the United States at will); equity demands that they contribute to the cost of running the government as much as citizens. [H.R. Rept. No. 98-
    432 (Part 2), supra at 223, 1984 U.S.C.C.A.N. 697, 1163.

    Clearly, petitioner, as one who retained (and exercised) the right to enter the United States at will throughout the years in issue, is among the class of
    individuals targeted by the 1984 legislation.”

    I think the laws at the time of the abandonment are in play; and a taxpayer who was in a similar situation but had informally abandoned this LPR status prior to 1984 would likely NOT be considered a U.S. person under the tax laws today. I don’t know why the court would mention this, and the implications of the 1984 legislation at length, if they thought otherwise.

    If I had a potential client come to me and they informally abandoned their LPR status prior to January 1, 1985, I would ask them to seek the advice of an immigration attorney to determine their legal status in the U.S. today, as a result of their particular facts/circumstances and the laws on the books at the time, PRIOR to subjecting them to a lifetime under the U.S. tax regime.

    There may also be a similar connotation for dual citizens pre-1986 Citizenship Act, but that’s probably a post for another day.

  3. @Don,

    Yes, using the treaty to expatriate is a useful strategy. It uses IRC Section 7701(b)(6) — the flush language at the end of the Section — to work.

    In the case I discussed the gentleman gave up his green card in 2010. He also could have probably become a resident of Germany and made the tax election under the treaty to break ties with the USA. But I think that would have made for higher tax instead of the zero tax he wanted.

    He was not trying to expatriate. He just wanted to escape tax, I think. Someone trying to expatriate properly should use his experience to understand the importance of cutting ties with the US in the proper way(s).

  4. Couldn’t someone do it the other way around? Take up residence in a country whose Tax Treaty is more favorable to dumping the Green Card?

  5. It appears that the judgement looked in to whether the (strong?) US / German tax treaty would have governed over the I-407, as he was arguing. However, the court didn’t buy that he was a German resident. I didn’t see if the strategy would have worked had he been able to prove his residence there.

    Knowing whether the tax treaty governs or the I-407 governs would help most people understand as to whether they might be in trouble or not.

  6. His case could have been different if he had lived in a treaty country. Yes. In that case he would have made an election to be a nonresident of the USA for tax. That would have burned his ability to renew his green card but he clearly didn’t care.

  7. Hi Phil–could you clarify if the rules were different for people who dumped LPR before AJCA went into effect in June 4, 2004? Specifically if you look at an 8854 instruction guide from, for example, 1999, it says–1999.pdf

    Long-Term Residents
    If you are a former LTR, the date of your expatriation is the earliest of:
    1. The date your green card was rescinded by the
    Immigration and Naturalization Service (INS).
    2. The date your green card was administratively or
    judicially determined to have been abandoned. (If you filed Form I-407, Abandonment of Lawful Permanent Resident Status, with the INS, the date of the abandonment of yourgreen card is on line 6(c) of that form.)
    3. The first day of the tax year for which you began to be treated as a foreign resident under the provisions of an income tax treaty and do not waive the benefits of the treaty.

    Specifically number 3 above could get you out without a formal paperwork requirement…

    If you look at the rules after AJCA provisions were passed on a, for example. 2013 8854, the instructions say:

    1. The date you voluntarily
    abandoned your lawful permanent
    resident status by filing Department of
    Homeland Security Form I-407 with a
    U.S. consular or immigration officer.
    2. The date you became subject to
    a final administrative order for your
    removal from the United States under
    the Immigration and Nationality Act and
    you actually left the United States as a
    result of that order.
    3. If you were a dual resident of the
    United States and a country with which
    the United States has an income tax
    treaty, the date you commenced to be
    treated as a resident of that country and
    you determined that, for purposes of the
    treaty, you are a resident of the treaty
    country and gave notice to the
    Secretary of such treatment. See
    Regulations section 301.7701(b)-7 for
    information on other filing requirements
    if you are such an individual.

    In other words it seems people who started treating themselves as tax residents for purposes of the tax treaty before June 4, 2004, could get out of the paperwork requirement

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