A “Resident” is a “Resident” is a “Resident” – or Not?
Who is a “resident”? What is a “resident”? This sounds like such a basic question. It is not so simple for tax purposes; nor for other provisions of the law.
There is the colloquial meaning of resident. For instance, if Mr. Smith says, “I have been a resident of Montana on my ranch for 30 years”; to what does he refer? What if Mr. Smith has a house in California (which he has owned for 15 years) and another ranch in Alberta, Canada that he has owned for 45 years. Is he also a “resident” of Canada and California?
What if he is not a U.S. citizen but holds a particular type of visa, such as lawful permanent residency (an immigrant visa)? What if he has a non-immigrant visa, such as an E-2 visa? What if he only spends 4 months a year on his ranch in Montana, of where is he a “resident”?
Is he a “resident” in some or all of these scenarios? Why is this important in the context of “U.S. expatriation taxation”?
There are three sources of federal law where it becomes very important, which will be discussed in later posts:
- Title 31 – which is the “bank secrecy” law that creates the “FBARs” – see a prior post, Nuances of FBAR – Foreign Bank Account Report Filings – for USCs and LPRs living outside the U.S.
- Title 26 – federal tax law that has a myriad of definitions regarding “residents”; see, Oops…Did I “Expatriate” and Never Know It: Lawful Permanent Residents Beware! International Tax Journal, CCH Wolters Kluwer, Jan.-Feb. 2014, Vol. 40 Issue 1, p9.
- Title 8 – federal immigration law; see, Part II: Who is a “long-term” lawful permanent resident (“LPR”) and why does it matter?
In addition, various states, such as California, Texas and Washington D.C. (actually not a state; but all places I happen to be licensed to practice law) have their own definitions of who are “residents” for income tax and other purposes. 
Subsequent posts will discuss the importance of understanding who is a “resident” and the implications under these various laws.
Laymen regularly have an idea of where they are “resident” – but that idea is often very different from definitions of “resident” under federal Titles 31, 26 and 8 and state laws (e.g., Texas, D.C., Florida, California, New York, etc.).
August 22, 2018 at 7:44 pm
I’m glad to see you’re taking this on Patrick (and I’m equally glad it’s you and not me)!
Within Title 26 estates and trusts also have unique residency rules… not to mention the treaty!
my head hurts thinking about it
September 8, 2018 at 2:44 am
Different US laws define “United States” differently. I’m not even sure if any of them coincides with the 14th Amendment’s definition (let alone where the 14th Amendment’s definition is printed), nor if any of them coincides with the article stating the boundaries inside of which a president had to be natural-born (or outside of which the president could be born if naturalized at birth to parents meeting conditions for transmission of citizenship). Treaties also define “United States” differently.
Title 26 also defines “alien” differently. Nationality law defines US citizens, US non-citizen nationals, and aliens, but as far as I can tell, a non-citizen national is an alien for tax purposes.
When I was a US citizen by birth and subject to US law (including but not limited to Title 26) and residing in Tokyo, the 14th Amendment made me a citizen of the US and of Tokyo, but only under US law not under Japanese law.
The question of residence in US territories has arisen in court cases. A resident of a US territory is subject to source-based taxation and residence-based taxation like in most of the world, but exempt from citizenship-based taxation even if the person is a US citizen, unlike the way US citizens get treated in the rest of the world.
September 8, 2018 at 2:47 am
P.S., I bet some people will accuse me of being a “birther” regarding Barack Obama, so let me mention Ted Cruz, John McCain, and Barry Goldwater.