A friend (Virginia Jeker, a U.S. tax lawyer practicing in Dubai) sent me this email with her ideas for how to deal with the problem of a would-be expatriate who has no Social Security Number. This was in response to the third episode of the Expatriation Chronicles.
Hi Phil – this was a great piece. Your described situation: T w/o a Social Security Number who never had a duty to file a US tax return (the young student type person, as in your example, who has had no income) – the individual must still file Form 8854 after expatriation to avoid ‘covered expatriate’ status. I have 2 comments (for what they may be worth!!):
1) I noticed the instructions to Form 8854 (at page 4 underneath the chart in the far left column) indeed contemplate the case when a T would not have a SSN & say the T should attach a statement explaining why he has no SSN. Thus, I think this might be sufficient instead of getting a SSN beforehand or the ITIN later on. What do you think of this possibility?
http://www.irs.gov/pub/irs-pdf/i8854.pdfIdentifying number. Generally, this number is your U.S. social security number. An incorrect or missing identifying number may result in a continued obligation to file U.S. tax returns as a citizen or resident of the United States for persons expatriating after June 3, 2004, and before June 17, 2008, and/or a penalty of $10,000. If you were never issued a social security number, please attach a statement explaining the reason.
2) Another possibility – IRS OVDP/Streamlined Hotline – I have been successful in getting them to issue a temporary IRS number if T has no SSN to be used on all returns etc. until the SSN is issued. This might be another possible way around the mess.
Thanks for the email, Virginia.
For the first point (looking at the instructions to Form 8854) I just have a profound fear of dropping a piece of paper into the Black Hole and hoping that it would be processed humanely. Ultimately, the IRS wants an ID number. I do not trust the system to arbitrarily assign a number when needed. My paranoia stops me from trying this.
For the second point (using the Streamlined Procedure/Hotline resources) this is good to know. I have not done this before.
Phil Hodgen
Philip D. W. Hodgen is the principal attorney of HodgenLaw PC, an international tax law firm based in Pasadena, California. He earned his undergraduate degree from Claremont McKenna College and his law degree from the School of Law at the University of California, Los Angeles. He then went on to earn a Master of Laws degree with a specialty in taxation from the University of San Diego School of Law. Admitted to the California bar in 1982, Phil spent nine years in law firms and with a large U.S. bank before starting his own firm in 1991.
Phil is a past chair of the International Tax Committee of the State Bar of California's Tax Section and was a member of the Executive Committee of the State Bar of California's Tax Section for 2004-2007. Phil frequently speaks on a variety of international tax, trust and estate topics to attorneys, accountants, and real estate professionals.
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Tax laws change over time, and the information in this post above may be less accurate today than it was at the time of the last revision. This post is not tax advice for your specific situation. Please contact an international tax professional to get personalized advice for your situation.
