U.S. Tax Court Rules Against Lawful Permanent Resident (LPR) in Abrahamsen
The U.S. Tax Court, in an opinion written by Judge Lauber (Abrahamsen v. Commissioner) placed much legal tax significance on the immigration form I-508 that Ms. Abrahamsen signed.
The Court noted this form, I-508, Waiver of Rights, Privileges, Exemptions and Immunities (Under Section 247(b) of the INA) specifically provides that the non-U.S. citizen “waive all rights, privileges, exemptions and immunities which would otherwise accrue to [her] under any law or executive order by reason of [her] occupational status.”
In that case, the individual was a Finnish citizen who eventually applied for lawful permanent residency. The immigration forms were not related to any specific tax form, such as the new IRS Forms W-8BEN; see, IRS Releases New IRS Form W8-BEN. * U.S. citizens and LPRs beware of completing such form at the request of a third party.
The takeaway from this opinion, is that individuals need to be aware of how signing a particular form (that is not a tax form) can have adverse tax consequences. In this case, the Court ruled that she had waived her benefits to IRC Section 893 by signing immigration Form I-508. The opinion of the Tax Court raises an interesting legal question about how signing a form (I-508) can seem to override the statutory protection granted which provides protection to a qualifying “. . . employee [who] is not a citizen of the United States . . . “
Signing various tax forms can cause even greater risks for non-citizen taxpayers; e.g., IRS Form W-9 versus W-8BEN. See, FATCA Driven – New IRS Forms W-8BEN versus W-8BEN-E versus W-9 (etc. etc.) for USCs and LPRs Overseas – It’s All About Information and More Information*
Fortunately for the taxpayer in the Abrahamsen case, she was not subject to the Section 6662 accuracy related penalty (“negligence” penalty) assessed by the IRS.
A subsequent post will analyze some potential U.S. tax consequences for individuals who sign immigration Form I-485, Application to Register Permanent Residence or Adjust Status
One thought on “U.S. Tax Court Rules Against Lawful Permanent Resident (LPR) in Abrahamsen”
January 30, 2018 at 11:33 pm
Hi Patrick, does the i-508 waiver requirement for non-immigrants essentially undo the 893 exemption? What about green card holder working for foreign governments who have never signed the waiver?