The decision in Aroeste v. United States, continues to affect how U.S. tax treaty rules apply to green card holders. In Aroeste, the federal district court rejected important IRS-DOJ arguments concerning when a lawful permanent resident is not treated as a resident of the United States under an income tax treaty.  I refer to the broader consequences of the case as the Aroeste Effect, which rears its head in proposed Treasury Regulations to be discussed for another day.

For years, the IRS Large Business and International Division (LB&I) published a Practice Unit titled Determining Tax Residency Status of Lawful Permanent Residents. Issued in 2013 and updated in 2014, it was used to help IRS personnel determine the U.S. tax residency of green card holders—the very subject litigated in Aroeste.  That Practice Unit has now been removed from the IRS website.

The removal is notable because the IRS continues to publish other related international tax Practice Units. For example, its 2018 Practice Unit, remains available:  Determining an Individual’s Residency for Treaty Purposes PDF  This 2018 Practice Unit has not been updated to address Aroeste. Importantly, however, it does not repeat the government’s argument in Aroeste that a taxpayer can lose or waive treaty benefits by failing to timely “take” a treaty position. The district court rejected the government’s position on that issue.

The IRS has not publicly explained why it removed the Practice Unit specifically addressing lawful permanent residents. Nevertheless, its disappearance after Aroeste is significant.  For green card holders living outside the United States, the practical issue is straightforward: holding a green card does not necessarily mean the individual must always be a “United States person” – i.e., a  U.S. tax resident. An applicable tax treaty can change that result.

The intricacies of the law can be complex, depending upon the facts of each person.  The IRS’s removal of its own Practice Unit on this subject is another noteworthy example of the Aroeste Effect.

Being stopped, searched, interrogated or simply questioned by U.S. federal government agents can be intimidating.  Especially, if you do not know your legal rights.

It can be more intimidating on your arrival to the U.S. airport, if the CBP officer (U.S. Customs and Border Protection) demands that you physically “return voluntarily” your green card.  The consequences they tell you will be immediate deportation from the U.S. 

• Removal from the U.S. – is it voluntary or not, under these circumstances?

• What are the U.S. federal tax consequences if you “return voluntarily” your green card?

• What if the CBP officer pulls out Forms W-8s you previously signed with your foreign financial institution and presents them to you in the airport and asks the following questions:

• • Why did you certify “under penalty of perjury” you were not a United States person on your foreign bank produced documents (you received in France, Germany, the U.K., Canada, Mexico, Japan, Indonesia, Australia — or any other foreign country)?
  • 
• • The officer then asks for all of the envelopes and papers in your luggage and opens the letters and files in your possession – See, the U.S. Supreme Court decision United States v. Ramsey, 431 U.S. 606 (1977).
• •  There are important unintended tax consequences that can befall individuals here:  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).

In Kawashima v. Holder (565 U.S. 478 (2012), the United States Supreme Court held that certain tax offenses committed by lawful permanent residents constitute crimes involving “fraud or deceit” for purposes of the Immigration and Nationality Act (“INA”). Specifically, the Court concluded that lawful permanent residents (a husband and wife from Japan) who were convicted of filing false tax returns resulting in a tax loss exceeding $10,000 had been convicted of an “aggravated felony” within the meaning of the INA.

As a consequence, a conviction for such an aggravated felony renders a lawful permanent resident removable (deportable) from the United States under the immigration laws. Importantly, however, the criminal conviction itself does not automatically terminate lawful permanent resident status. Rather, it provides the legal basis for the Department of Homeland Security to initiate removal proceedings, after which an Immigration Judge may enter a final order of removal.

Once a final order of removal becomes effective, the individual’s lawful permanent resident status is considered to have been revoked. For U.S. federal income tax purposes, this generally results in the termination of lawful permanent resident status under 26 U.S.C. § 7701(b)(6)(B), which provides that an individual ceases to be a lawful permanent resident when “such status has been revoked or has been administratively or judicially determined to have been abandoned.” Accordingly, following a final order of removal, the individual is no longer treated as a lawful permanent resident for purposes of the tax law as summarized below:

The 2012 case involved Akio and Fusako Kawashima, Japanese citizens who had been lawful permanent residents since 1984. Mr. Kawashima pleaded guilty to willfully filing a false tax return under 26 U.S.C. § 7206(1), while Mrs. Kawashima pleaded guilty to aiding and assisting in the preparation of a false tax return under 26 U.S.C. § 7206(2).  The immigration judge issued the order of removal.  The Board of Immigration Appeals affirmed. Holding that convictions under 26 U. S. C. §§7206(1) and (2) in which the Government’s revenue loss exceeds $10,000 constituted aggravated felonies, the Ninth Circuit affirmed and ultimately so too did the SCOTUS in this decision. 

The Supreme Court concluded that these tax offenses necessarily involve fraud or deceit and, because the tax loss exceeded the statutory $10,000 threshold, they constituted aggravated felonies under immigration law. The Supreme Court of the U.S. therefore upheld the government’s order (which had been upheld through the Ninth Circuit Court of Appeals) removing the Kawashimas to Japan.

This of course is important for U.S. “expatriation tax” purposes, since the “lawful permanent resident” status for tax purposes will necessarily terminate upon the final order of removal.  Not before.  Once LPR status terminates, the individuals will become covered expatriates, if they meet the time period under the statute to become “long term residents” as was the case for Mr. and Mrs. Kawashima and meet either of the three tests:  the tax liability, net asset and certifications of compliance with the federal tax laws.  See, Why a “long-term” LPR can NEVER avoid “Covered Expatriate” status under IRC Section 877A(g)(1)(B) if Asset or Tax Liability Test is Satisfied!

• Pathways to United States Citizenship – (USC): Focus on the EB-5

Every individual who ultimately becomes a naturalized U.S. citizen must first qualify for lawful permanent resident (“LPR”) status unless a narrow statutory exception applies. Although public attention frequently focuses on the EB-5 immigrant investor program, with the idea they are those with greater assets and income (contemplating taxes) EB-5 investors represent only a very small percentage of all individuals who become lawful permanent residents. Understanding the relative size of each immigration pathway is essential because every pathway ultimately raises many of the same U.S. tax issues—including worldwide income taxation, estate and gift taxation, and the tax consequences of later abandoning lawful permanent resident status or renouncing U.S. citizenship.

The EB-5 visa has been a fixture of U.S. law since the early 1990s.  It was not until 2009 that a substantial number of EB-5 visas were issued in a given year, 4,218 to be exact.  Statistically, the  total  EB-5 visa leading to LPR status is  a fraction of the other categories as explained here.  For an excellent overview of the law and categories,  see  the  CRS  report-  Permanent Legal Immigration to the
United States: Policy Overview (Updated November 4, 2024)

• EB-5 Visa – to a “Green Card” then to United States Citizenship – (USC)

From the laws inception in 1992 through FY2004, there were only 6,024 EB-5 visas issued during that 12 year period.  That is an annual average of only approximately 500 persons.  See, the GAO Report on Immigrant Investors. As the program grew in popularity so too did the location of investors from around the world.  It was not until 2009 when the total number of investors started growing substantially.  Most significantly in 2009 when 4218 EB5 visas were issued, still less than 1/2 of the 10,000 allocated annually by the statute.

These numbers kept going at an annual pace especially starting in 2012, when 6,764 EB-5 visas were issued and then around 10K+/- annually for the last dozen years or so, up until the years that were impacted by a change in the law and a bit by COVID (2020 and 2021).  There are important tax consequences that can have unintended outcomes for individuals who get a green card:    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):

• Chinese Investors Have Dominated the total Group of EB-5 Investors

While investors come from most parts of the world, it is China that has dominated the total investment in EB-5 projects representing approximately 70% of total investors over the last 15 years.  See prior post which has a chart reflecting the total Chinese investors as a percentage of total –  Part II of Part II: The Gold Card – The U.S. Tax Costs – “It’s like the green card, but better and more sophisticated.”

The country-of-origin analysis is important because practitioners frequently advise clients from these jurisdictions regarding immigration planning, cross-border tax planning, and eventual expatriation planning with consequences in those countries.

I have compiled the total list of countries from which EB-5 visa investors came from as summarized in the Country of Origin global graphic for FYE 2024.  There are over 100 countries from which these investors came from, but again, China is the dominant country, followed by Vietnam, India, Taiwan and then South Korea as the countries with the greatest number of investors.  South Africa comes next, followed by Brazil and then Mexico, but each with less than 200 total investors, each country as follows:

The importance of this analysis is to help individuals (and their advisors) who fit into these categories, e.g., who have a pathway to a green card and then on to become a naturalized U.S. citizen, understand the potential “tax expatriation” consequences of their decisions over the long-run.

• • What are the U.S. “tax expatriation” consequences to individuals who go down these pathways, including to their dependent children, or spouses or any future beneficiaries who are “United States person”?

• • What are the tax expatriation consequences if the individual later decides they do not want to be a green card holder or a U.S. citizen and later wishes to abandon their lawful permanent residency status or formally renounce their U.S. citizenship?

These and many other questions should be considered, especially for long-term family planning.  Not just for the investor, but for their children and spouse, who may be eligible for the visa that can lead to LPR status and eventually to USC.  Facilitating younger children (under 21 years of age) is a common driver for EB-5 investors for families who want the United States to be a pathway for their children’s’ future.

• Why These Immigration Pathways Matter from a Tax Perspective

The purpose of this analysis extends beyond immigration statistics and EB-5 is only a small pathway.  For historical reference, see a prior post:  How Many Lawful Permanent Residents does the U.S. Receive (Per Year: 1820-2022)

Every pathway leading to lawful permanent resident status almost always subjects the individual to the comprehensive U.S. federal income tax system. Depending upon the individual’s assets, family structure, treaty residence, and future living plans, obtaining a green card will also have significant implications for:

• worldwide income taxation;
• estate and gift taxation;
• foreign trust reporting;
• information reporting obligations under various laws;
• controlled foreign corporation rules;
• PFIC reporting;
• exit tax planning; and
• long-term succession planning.

Equally important, many lawful permanent residents eventually decide to return permanently to their country of origin or another foreign jurisdiction. Those individuals—and frequently their spouses and dependent children—must carefully consider the tax consequences of formally abandoning lawful permanent resident status or, after naturalization, renouncing U.S. citizenship.  The sooner individuals and their advisors realize these consequences, the better they can plan for important life decisions.

Those tax consequences are collectively referred to as the U.S. tax expatriation rules, and they form the principal subject of this website.

The legal pathways towards lawful permanent residency status can be broken down into the following categories and the EB-5 category is a fraction (only about 1%) of the total pool leading to LPR status:

A. Family-Sponsored Immigration

This is the most common pathway used for spouses, unmarried children who are under twenty-one years of age and parents of an adult U.S. citizen.  See, 8 U.S. Code § 1153(a).  The table below further breaks down immediate relatives (which has no cap) versus family preferences (F1-F4) which has strict statutory limits of the total issued.  See, U.S. Department of State, Visa Bulletin For June 2026, describing these limits including the per country limits.  Approximately 64% of all green card holders come through this family sponsored category according to the U.S. Department of Homeland Security, Office of Homeland Security Statistics (OHSS), Yearbook of Immigration Statistics, Table 6 (Persons Obtaining LPR Status by Type and Major Class of Admission).

B. Employment-Based Immigration (Including EB-5)

This category includes EB-1 through EB-5 categories that include individuals with extraordinary ability, certain professionals, other skilled workers. The  chart  I prepared  here  reflects  the total number of EB-5 visas issued cumulative. This chart reflects the total number of cumulative EB-5 visas that have been issued through the FYE 2024 of approximately 131K.  This does not take into consideration how many of these were issued to the principle investor versus spouses and children under twenty-one years of age.  See, 8 U.S. Code § 1153(b).

EB-1, EB-2 and EB-3 represent the greatest group of individuals who obtained LPR status (e.g., approximately 5X, each category compared to the EB-5 category).  See Yearbook of Immigration Statistics, Table 6.

For instance, annually the EB-1 through EB-3 categories are processing about 50K per year of each, and the EB-5 category is only 131K over most of its 25 year life (or about 10K per year – for more recent years). Approximately  16% of all green card holders come through these employment based preferences.

Table –  Approximate Decade-Average Share by Category, FY2014–FY2023

C. Diversity Immigrant Program

The annual diversity lottery, allocated by random selection, to natives of countries with historically low rates of immigration to the United States.  See, 8 U.S. Code § 1153(c).   The Attorney General plays a key role by statute in this determination.  There is a statutory maximum of 55,000 and only represents about 4% of all LPRs compared to the larger pool.  This program is on hold as of December 19, 2025 when the USCIS policy memorandum (PM-602-0193) directs officers to place an immediate hold on pending adjustment of status, ancillary benefits and associated waiver applications for individuals applying through the Diversity Immigrant Visa program.  [1, 2]

D. Humanitarian and Special Pathways: Refugees/Asylees

Several routes proceed outside the preference system (the three categories above). Refugees and asylees adjust under a specific statutory regime; self-petitioning abused spouses and children proceed under other provisions; victims of qualifying crimes and of trafficking can adjust from U and T nonimmigrant status; and certain children subject to qualifying juvenile-court findings can qualify, among others.  There are statutory limits placed on this group.

Whatever category one uses for LPR status, there will be important U.S. federal tax consequences to them and typically their family members.  That’s the large part of the focus on this forum where the author has written about the subject of how it all ties to “tax expatriation”.  As previously reported,   there are 3.88 million “LPR” individuals who are living outside the U.S. – per the 2024 report by the U.S. federal government.  Many of them live in a treaty country. See, Table 1 of the Homeland Security, Office of Immigration Statistics –  Estimates of the Lawful Permanent Resident Population in the United States and the Subpopulation Eligible to Naturalize: 2024, and Revised 2023.

Table of contents

• Is there a legal difference between “relinquishing” and “renouncing” U.S. citizenship for tax purposes?
• What date actually matters under the U.S. expatriation tax rules?
• Why don’t the words “relinquish” and “renounce” change the tax outcome?

Read the full analysis here.

Is there a legal difference between “relinquishing” and “renouncing” U.S. citizenship for tax purposes?

For U.S. federal tax purposes, “relinquish” and “renounce” are in effect interchangeable. Many people assume the two words carry an important legal distinction. For federal tax purposes, they generally do not. This question was first taken up in an earlier post dated June 21, 2014. The expatriation tax statute, IRC Sections 877 and 877A (the U.S. tax rules that apply when a person gives up U.S. citizenship), uses both terms in the same breath. What drives the tax result is not which word applies but the “expatriation date.”

What date actually matters under the U.S. expatriation tax rules?

The key time reference is the “expatriation date.” Under IRC Sections 877 and 877A (the U.S. expatriation tax rules), this date is defined in Section 877A(g)(3). It focuses on specific dates tied to meetings or events with the U.S. Department of State. Because the tax outcome turns on this date, the choice between the words “relinquish” and “renounce” does not, by itself, change it.

Why don’t the words “relinquish” and “renounce” change the tax outcome?

Both words point to the same thing under the tax law. The expatriation tax statute, IRC Sections 877 and 877A, uses “renounce” and “relinquish” in the same breath. The result instead depends on the “expatriation date” defined in Section 877A(g)(3), which is tied to specific meetings or events with the U.S. Department of State. So the terminology a person uses does not, on its own, change the federal tax treatment.

Consult an experienced attorney about how these rules apply to a specific situation.

Read the full analysis here.

As the world’s athletes have arrived to perform on U.S. soil, the U.S. tax system is a broad net.  The 2026 FIFA World Cup—hosted across the United States, Mexico, and Canada—is a useful occasion to revisit a question that recurs every time a global athlete or entertainer steps onto a U.S. field, stage, or court: what does the United States get to tax, what forms govern the answer, and when does a visiting performer or athlete cross the line from nonresident into resident – including if they hold a lawful permanent resident card?

This blog is dedicated to issues of “tax expatriation” which crosses into different professions and global lifestyles.  See, for instance the following prior blogs:

• Why Sir Paul McCartney would have to give up his Knighthood – if he were to become a U.S. Citizen?

• Famous Americans who Renounced U.S. Citizenship – Elizabeth Taylor!

There are of course many famous athletes who were not U.S. citizens and then became green card holders and oftentimes then became naturalized U.S. citizens.  Since the Knicks just won the NBA championship after 53 years, one of their greatest, Patrick (mi tocayo) Ewing left Jamaica as a boy, became a green card holder and then a naturalized citizen.  A 1985 New York Times article, A Favorite Son Goes Home, describes his first return to the island since a boy.

Soccer players, have moved all over the world and Alejandro Zendejas is a current U.S. World Cup player born in Ciudad Juarez, Chihuahua, Mexico, at the border who later obtained lawful permanent residency and also became a naturalized citizen.  That means (as a result of his naturalized U.S. citizenship) if he were ever to renounce his U.S. citizenship, he would necessarily become a “covered expatriate” as defined in the tax statute.

See an earlier blog –

• What Happens If You Become a Covered Expatriate?

Athletes and entertainers are specially taxed in the U.S. in the sense they typically receive few benefits from the U.S. income tax treaty network.  For instance, a world famous Norwegian soccer player such as Erling Haaland who has already equaled the Norwegian record (in just his first match) for most World Cup goals, previously belonging to midfielder Kjetil Rekdal is presumably subject to the U.S.-Norway treaty. The U.S.-Norwegian Income Tax Treaty is one of the very old tax treaties (1971) still on the books and has an “old fashioned” artist/entertainer/athlete provisions imbedded in the independent services provision that allows each government to specially tax artists and athletes if they earn over US$3,000.

A protocol to the treaty adopted in 1980 has a “new” article 14A specific to artists and athletes as reflected here in its entirety allowing the government to tax athletes and entertainers when they perform in the country (overriding other protective provisions of the treaty – e.g., Business Profits Art. 5, Independent Personal Services Art. 13 and Dependent Personal Services Art. 14):

The IRS also adopted a specific program, called the Central Withholding Agreement (“CWA”) program created by Revenue Procedure 89-47 specific to artists and athletes.  I personally think it is a program that is not authorized by the statute and often applied by the IRS in a manner that violates the withholding tax regime we have in Chapter 3 of our statutory tax law, Subtitle A.  In practice, third parties are subject to the 30% withholding tax on certain gross proceeds paid to companies other than the artist or athlete, if the athlete or artist doe not participate with the IRS in their CWA.

In the case of global soccer players, even one with a “lawful permanent resident” card (i.e., a “green card”) they may be subject to the Chapter 3 withholding tax rules if the athlete is like Mr. Aroeste (Aroeste v. United States (Case No. 22-cv-00682-AJB-KSC)) holding a green card in his pocket, but not a U.S. income tax resident by application of the residency rules set forth in an income tax treaty.  Will the soccer player become a “covered expatriate” and not even know it (oops)?! It can get tricky quickly.   There are important unintended tax consequences that can befall individuals here:  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).

Meanwhile, Mexico and the U.S. have both advanced to the knockout round.

Canada plays Switzerland and presumably has a 99% chance of advancing to the Round of 23.

On this page:

• How much does it cost to renounce U.S. citizenship?
• Why did the State Department raise the renunciation fee so much?
• When did the higher renunciation fee take effect?
• How long can it take to get an appointment to renounce?
• What other consular fees changed at the same time?
• Where were the new fees published, and could the public comment?

Read the full analysis here.

How much does it cost to renounce U.S. citizenship?

The fee to process a Renunciation of U.S. Citizenship rose to US$2,350, up from US$450. That is an increase of more than 500%. The U.S. Department of State announced the change, and it applies to the consular service of accepting and adjudicating a renunciation.

Why did the State Department raise the renunciation fee so much?

The Department said the new fee reflects the true cost of providing the service. Documenting a renunciation is described as extremely costly, because U.S. consular officers overseas spend substantial time to accept, process, and adjudicate each case. The fee had previously been subsidized, and the Department said it seeks to recover the cost of consular services through the fees it collects. It reviews these costs regularly and adjusts fees to match the cost of service.

When did the higher renunciation fee take effect?

The new fee took effect on September 12, 2014. The Department announced the change from Mexico City on August 28, 2014, as part of a broader adjustment to processing fees for several consular services.

How long can it take to get an appointment to renounce?

At some consulate offices around the world, appointments for renunciations were reportedly not available until the year 2015. A person seeking to renounce may face a long wait, because demand for these appointments can exceed what a given consulate can schedule in the near term.

What other consular fees changed at the same time?

Most nonimmigrant visa processing fees stayed the same, but several other fees moved alongside the renunciation fee:

• The fee for E visas (treaty-traders and treaty-investors) decreased.
• The fee for K visas (for fiancé(e)s of U.S. citizens) increased.
• The fee for Border Crossing Cards for Mexican citizen minor applicants under age 15 increased by $1.
• For immigrant visas, the fee for family-sponsored immigrant visas increased, as did the fee for domestic review of an Affidavit of Support.
• All other immigrant and special visa processing fees that changed decreased.

Where were the new fees published, and could the public comment?

The proposed fees were published in the Federal Register and took effect 15 days later. The change was issued as an interim final rule, viewable at http://www.regulations.gov. Comments were accepted until 60 days after publication, and the Department said it would consider the public comments and address them in the published final rule. Fee information may also be found on the Bureau of Consular Affairs website, travel.state.gov, and on the websites of U.S. embassies and consulates.

Read the full analysis here.

On this page:

• What rules govern Social Security numbers?
• Who is eligible for a Social Security number?
• How do you apply for a Social Security number?
• How do immigrants get a Social Security number through the immigration process?
• How many replacement Social Security cards can a person get?
• Can you cancel or expunge your Social Security number after losing US citizenship or green card status?

Read the full analysis here.

What rules govern Social Security numbers?

The Social Security Act regulations set specific rules for Social Security numbers (SSNs) at § 422.103, titled “Social security numbers.” These rules cover how a person applies for an SSN, how to obtain a replacement Social Security card, how SSNs are assigned, and how the Department of Homeland Security (DHS) can have an agreement with the Social Security Administration (SSA) on issuing SSNs to people who have immigrated to the United States.

Who is eligible for a Social Security number?

Form SS-5 explains the general requirements for an SSN as set forth in the law. To qualify for an SSN and a card, an individual must be one of the following:

• a U.S. citizen,
• a person with lawful, work-authorized immigration status, or
• a person with a valid non-work reason for requesting an SSN and a card.

How do you apply for a Social Security number?

Applications for an SSN are completed on Form SS-5, which is located on the SSA’s website. Form SS-5 sets out the general requirements for an SSN as established in the law, including that the applicant be a U.S. citizen, have lawful work-authorized immigration status, or have a valid non-work reason for requesting a number and card.

How do immigrants get a Social Security number through the immigration process?

Under § 422.103(b)(3), the “Immigration form” rule, SSA may enter into an agreement with the Department of State (DOS) and the Department of Homeland Security (DHS) to collect enumeration data as part of the immigration process. Where such an agreement is in effect, an alien need not complete a Form SS-5 with SSA. Instead, the person may request, through DOS or DHS as part of the immigration process, that SSA assign a Social Security number and issue a card. These requests are made on forms provided by DOS and DHS.

How many replacement Social Security cards can a person get?

The regulations limit how many replacement Social Security cards a person may receive. An individual may obtain a maximum of 10 replacement cards over a lifetime.

Can you cancel or expunge your Social Security number after losing US citizenship or green card status?

There appears to be no statutory or regulatory rule in the law that allows an individual to “expunge” or otherwise terminate a Social Security number once it has been obtained. This appears to remain the case even after a person loses U.S. citizen (USC) or lawful permanent resident (LPR, or green card) status. The assigned number generally stays in place. Anyone weighing the tax or immigration consequences of giving up citizenship or a green card may want to consult an experienced attorney.

Read the full analysis here.

Many green card holders who move abroad assume their permanent resident status is safe as long as they return to the United States occasionally. Under US immigration law, that assumption can be wrong. A green card can be abandoned automatically, without any formal filing, simply by how long you spend outside the United States.

Table of contents:

How can a green card be abandoned?
What triggers an automatic abandonment finding?
What factors does DHS consider?
How does filing a tax return as a non-resident affect your status?
What can you do if you expect a long absence?

How can a green card be abandoned?

A lawful permanent resident (LPR) can lose permanent resident status through removal (deportation) ordered by an immigration court, or through abandonment. Abandonment can happen formally, by filing Form I-407 (Abandonment of Lawful Permanent Resident Status), or automatically, by operation of law, when an LPR takes an action that constitutes abandonment under immigration law, such as departing the United States for more than a temporary visit abroad.   There are important unintended tax consequences that can befall individuals here:  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).

What triggers an automatic abandonment finding?

The Department of Homeland Security (DHS) will make an abandonment finding if an LPR takes a single trip outside the United States lasting more than one year. After a trip of more than one year, the LPR can only challenge the finding in removal proceedings. For a single trip lasting between 6 months and one year, DHS presumes the LPR intended to abandon their permanent resident status, but the LPR may rebut that presumption. Even for shorter trips, DHS may find abandonment if the LPR has spent a significant amount of time outside the United States on multiple trips.

What factors does DHS consider?

DHS and the immigration courts look at: the purpose and duration of the trip abroad; whether there was a specific event after which the LPR planned to return; and the LPR’s family ties, employment, property holdings, and business affiliations in the United States versus the foreign country.

How does filing a tax return as a non-resident affect your status?

Filing a US income tax return as a non-resident alien raises a rebuttable presumption of abandonment of LPR status for immigration purposes.

What can you do if you expect a long absence?

If an LPR knows they will need to spend significant time outside the United States, they should apply for a reentry permit before departing. A reentry permit alone does not guarantee readmission following a long absence, but it is evidence of the intent to return to the United States and maintain permanent resident status.

This post provides general information only and is not legal advice. Consult an experienced attorney for guidance specific to your situation.

Read the full analysis here.

When long-term green card holders give up their green card, they face the same exit tax rules as US citizens who renounce citizenship. There is one exception in the law that allows certain dual citizens by birth to avoid covered expatriate status even if they meet the income or asset tests. Long-term green card holders cannot use it. Here is why.

Table of contents:

What makes someone a covered expatriate?
Is there an exception to the income and asset tests?
Who can use this exception?
Why green card holders cannot use it
What this means if you are a long-term green card holder

What makes someone a covered expatriate?

When you give up your green card (or renounce US citizenship), the law determines whether you are a covered expatriate. You are a covered expatriate if you meet any one of three tests: an average annual income tax liability above an inflation-adjusted threshold, a net worth of $2 million or more on the date of expatriation, or a failure to certify 5 years of US tax compliance – where it is commonly certified on IRS Form 8854.

Meeting even one of these three tests makes you a covered expatriate. All three tests apply equally to US citizens who renounce and to long-term lawful permanent residents (LPRs) who give up their green card.

Is there an exception to the income and asset tests?

Yes, for some people. Under IRC Section 877A(g)(1)(B), certain individuals are exempt from the income and asset tests. If this exception applies to you, you can avoid covered expatriate status even if your net worth exceeds $2 million or your income exceeds the threshold. The certification requirement under Section 877(a)(2)(C) still applies to everyone, including those who qualify for this exception.

Who can use this exception?

The exception is narrow. Under the statute, it applies only to an individual who: became a citizen of the United States and a citizen of another country at birth; as of the date of expatriation, continues to be a citizen of and is taxed as a resident of that other country; and has been a US resident for no more than 10 taxable years during the 15-year period ending with the taxable year of expatriation. Only someone who acquired US citizenship automatically at birth, while also holding citizenship of another country from birth, can potentially qualify.

Why green card holders cannot use it

Lawful permanent residents are not US citizens. They hold a green card, which is a grant of permanent resident status, not citizenship. Because the exception in Section 877A(g)(1)(B) applies only to individuals who became US citizens at birth, long-term LPRs cannot satisfy this requirement by definition. The exception is simply not available to them.

What this means if you are a long-term green card holder

A long-term LPR who meets either the $2 million asset test or the income tax liability test will become a covered expatriate, even if they fully satisfy the 5-year certification requirement. Satisfying the certification requirement is necessary for everyone, but for long-term LPRs it is not sufficient on its own. If you also meet the income or asset test, you are a covered expatriate regardless.

The consequences include the mark-to-market exit tax on unrealized gains and the Section 2801 tax on covered gifts and bequests to US persons. These consequences can affect your US family members for decades. Understanding them well before you give up your green card, not after, is the only way to plan for them.

There are important unintended tax consequences that can befall individuals who have a green card depending upon their factual circumstances:   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):

This post provides general information only and is not legal advice. Consult an experienced attorney for guidance specific to your situation.

Read the full analysis here.