Earlier this year, the Department of Homeland Security, U.S. Citizenship and Immigration Services issued a new form for the abandonment of an individual's United States green card (technically, "lawful permanent resident" status). I-407, Record of Abandonment of Lawful Permanent Resident Status, is now two pages long and somewhat more formal in the presentation of its questions and procedure.
The new Form I-407 now provides a separate section to obtain the consent of parents of minors who relinquish the green card. As in the old form, the new form asks for reasons for abandonment of the green card, but this question now appears to be more formally presented and appears to require a more detailed statement. The sections to be completed by the government official handling the abandonment are now more exacting. For example, they require the official to certify whether he has interviewed the individual and if not, to provide reasons indicating why he believes the individual may have abandoned his US permanent residency. There is also a new section for a government language interpreter to complete, as well as a section to be completed confirming whether a copy of the I-407 was provided to the individual.
Green card holders are taxed in the same manner as US citizens: they are both subject to US income tax on their worldwide income regardless of the source of that income and regardless of where the green card holder or citizen is living at the time it is earned. However, they are not treated exactly the same when it comes to relinquishing their US status. The US citizen who renounces his US citizenship, must now pay a fee of US$2,350 for the privilege of doing so. On the other hand, there is still no fee (at least not yet!) for relinquishing one's green card.
Dire consequences can result if an individual does not properly relinquish his green card and file all required paperwork with the IRS. Sadly, many clients come to me in the mistaken belief that simply because the green card has expired for immigration law purposes, it has likewise "expired" for US income tax purposes relieving them of the duty to pay US taxes. Nothing can be further from the truth. Read more on this topic here and here.
Interestingly, the instructions to the new Form I-407 specifically advise applicants that: "The Department of Homeland Security is required to provide the Internal Revenue Service (IRS) with the names of individuals who choose to abandon their LPR status. If you file this form with us, we will provide only your name and the filing date to the IRS. (Internal Revenue Code section 6039G(d)(3))".
I wonder how long it will be before the Form I-407 mandates a social security number which the Department of Homeland Security must turn over to the IRS?
Code Section 6039G implements the so-called "Name and Shame" list. This is a quarterly publication in the Federal Register by the IRS listing the names of individuals about whom the IRS has received information of a loss of citizenship during the preceding quarter. This list is required to include the names not only of former U.S. citizens but of certain former green card holders. Under 26 U.S.C. § 6039G(d)(3), "the Federal agency primarily responsible for administering the immigration laws shall provide to the Secretary the name of each lawful permanent resident of the United States (within the meaning of section 7701 (b)(6)) whose status as such has been revoked or has been administratively or judicially determined to have been abandoned."
The Federal Register provides that "for purposes of this listing, long-term residents, as defined in section 877(e)(2), are treated as if they were citizens of the United States who lost citizenship". The statutory authority for the IRS to publish the names of former green card holders is contained in two Internal Revenue Code sections: the last sentence of 26 U.S.C. § 6039G(d), which mandates publication, refers only to "loss of citizenship"; but Code Section 877(e) provides that a long-term resident of the United States (this is generally an individual who has held the green card for 8 of the past 15 tax years) who "ceases to be a lawful permanent resident of the United States (within the meaning of section 7701(b)(6)) shall be treated for purposes of this section and sections 2107, 2501, and 6039G in the same manner as if such resident were a citizen of the United States who lost United States citizenship on the date of such cessation or commencement."
So, if you've held your green card for at least 8 of the preceding 15 tax years, your name will appear on the "Name and Shame" list when you return the card to Uncle Sam. Quite frankly, I have yet to find an individual who cared!Back to Articles Back to Virginia La Torre Jeker J.D.
The information provided in this article is for general information purposes only. The information is not intended to be comprehensive or to include advice on which you may rely. You should always consult a suitably qualified professional on any specific matter.
Virginia La Torre Jeker J.D.
Virginia La Torre Jeker J.D., is based in Dubai. Virginia has been a member of the New York Bar since 1984 and is also admitted to practice before the United States Tax Court. She has over 30 years of experience specializing in the international aspects of US tax, including FATCA. She has been quoted in the New York Times and Newsweek, and is regularly quoted in many local news articles and publications."
Maastricht University - 5th Global Tax Policy Conference: Tax Policy after BEPS, what can be expected? On 6 September 2019 at the Royal Museums of Arts and History in Brussels, Prof. Dr Hans van den Hurk, chairman of the Annual Global Tax Policy Conference of the Maastricht Centre for Taxation (Maastricht University) with his esteem speakers are addressing the above question.Read more