Giving Up a “Green Card” Does Not Protect from Expatriation Tax Regimes

The current climate of increased enforcement of foreign bank account reporting and the increased complexity of complying with various information reporting under United States Laws has resulted in many people inquiring into relinquishing their Permanent Residence (“Green”) card. Such a move requires not only that proper immigration laws are followed by also requires proper tax planning to minimize the potential impact of the expatriation tax regimes.

The threshold question of whether the expatriation regimes applies is a determination of (1) whether a person is a lawful permanent resident and (2) whether such lawful permanent resident is a long term resident.

A person is a lawful permanent resident if such person has a status of being lawfully accorded the privilege of residing permanently in the United States as an immigrant (such as through a “green card”) in accordance with the immigration laws and such status has not been revoked or administratively or judicially determined to have been abandoned. Thus, even if someone has remained outside the United States in excess of the allowable period and thereby jeopardized their green card, this person is still considered a permanent resident for tax purposes because the status has not been revoked and not yet been administratively or judicially determined to have been abandoned.

A person is a long-term resident, and thus subject to the second part of the analysis, if this person is a lawful permanent resident (defined above) of the United States in the last eight taxable years of the fifteen taxable years. However, there may be some tax planning opportunities, especially related to tax treaties that can be used to avoid a person being considered a long-term resident.

Disclaimer: This Article is intended to be used solely for general information purposes and is not intended as legal advice.