What could go wrong?
You might be unable to depart, or, refused re-entry into, the U.S. if:
You were required to obtain a sailing/departure permit before you left, and did not do so.
You were not required to obtain a sailing/departure permit, but you are not carrying convincing documentation on you, perhaps including your most recent income tax returns, that proves this.
Many non-citizens are not required to obtain a sailing or departure permit, (certificate of compliance with tax obligations), but some are. Do you know whether or not you need a sailing or departure permit?
Or maybe in the past you went to an IRS Taxpayer Assistance Center and tried to apply for a sailing or departure permit, but were met by blank looks and sent away. And you had no problem leaving or re-entering the U.S.
What is different today?
With today’s work emphases for Customs and Border Protection Agents, do your best to protect yourself from being refused departure from or re-entry into the U.S. Obtain a sailing or departure permit, if required, and present it, or documentation showing you are excused from needing a permit, when you leave the U.S.
What is a Sailing or Departure Permit?
A sailing permit is a certificate that a non-U.S. citizen is or will be in compliance with their obligations under the U.S. tax code for the year of departure or the preceding year.
The certificate is part of each of the two tax forms that the taxpayer might need to submit for approval at an IRS Taxpayer Assistance Center.:
Form 2063 U.S. Departing Alien Income Statement- Submitted by
1) A resident alien* who has not received a Termination Assessment, (see Completing Form 2063) or,
*resident alien by having a green card, or meeting the substantial presence test (SPT)
2) A non-resident alien with no taxable income from U.S. sources
Form 1040-C U.S. Departing Alien Income Tax Return
This is not the annual, final income tax return. Form 1040, or Form 1040NR, must be filed as usual. On Form 1040-C, you calculate what the full year income and tax is expected to be. If it shows a potential balance due, usually that must be paid when submitting Form 1040-C for it to be approved and the certificate of compliance issued.
When is the Sailing Permit Issued? If the form (2063 or 1040-C) is approved, the blank certificate which is part of the form is completed and signed by the IRS agent. Copies are provided to the taxpayer for presentation to the Border and Customs Protection officer.
The Appointment for the Sailing Permit
Take the completed form (2063 or 1040-C) and all supporting documentation to the appointment. Be able to confirm taxpayer status, income, taxes paid or withheld, exclusions, deductions, treaty benefits.
Phone well in advance to make a timely appointment at an IRS TAC – Taxpayer Assistance Center https://apps.irs.gov/app/officeLocator/index.jsp
https://apps.irs.gov/app/officeLocator/index.jsp
Or, on the main page of the IRS website, scroll to the bottom and click on: Find your local office. Enter a zip code to find a TAC near where you work, or where you will leave from.
Click on a listed office, and, under “Services Provided”, look for: Alien clearance (sailing permit).
The best appointment dates will be between 30 days and 14 days in advance of your planned departure date. The certificate cannot be issued more than 30 days in advance. If there are complications, you want to have enough time to resolve them before your planned departure date.
Who Does Not Need a Sailing Permit? (Am I excused from needing a sailing/departure permit?)
Category # 1 – Foreign diplomats with an A1 or A2 visa, and
Category # 2 international organization staff with a G1, G2, G3, or G4 visa
The Exceptions apply:
- If the emoluments received from the organization that sponsored the visa are not taxable by the U.S.,
- if the visa holders do not have any U.S. source income on which they must file a U.S. tax return,
- they did not obtain a U.S. green card and sign the USCIS I-508 waiver, per IRC section 247 requirements.
- FYI: An A3 or G5 visa holder, personal staff of an A 1 or 2 or a G 1, 2, 3, or 4 visa holder, will need a sailing permit only if they are not travelling in the company of their visa sponsor.
Category #3 Students, industrial trainees, and exchange visitors, their spouses and children on F1, F2, H3, H4, J1, J2,or Q visas, whose only U.S. source income were allowances to cover expenses, the value of food, services or lodging connected with their program, or from employment authorized by USCIS, or interest on bank deposits not connected with a U.S. trade or business.
Category #4 Students, spouses and children on a M1 or M2 visa, whose only income from U.S. sources is from employment authorized by USCIS, or interest on bank deposits not connected with a U.S. trade or business.
Category #5 A catchall group of visitors and trainees with no U.S. taxable income during the tax year or the preceding tax year, including military trainees, those on a B1 or B2 visa, in transit, entering on a border crossing card, or in the U.S. for 90 days or less.
Category #6 Residents of Canada or Mexico who are frequent commuters to work in the U.S. and whose U.S. wages are subject to withholding.
Completing Form 2063 – U.S. Departing Alien Income Tax Statement
IRS describes Form 2063 thusly:
This form is used to request IRS certification that all U.S. income tax obligations have been satisfied by:
A resident alien* whose taxable period has not been terminated, or
A departing non-resident alien having no taxable income from U.S. sources.
*Resident alien by meeting either the green card or the substantial presence test
The two-page Form 2063 includes a blank certificate on page 1, to be completed by the IRS.
The form’s sub-headline adds: a resident alien against whom a Termination Assessment has not been made. In the instructions for Form 1040-C, a Termination Assessment is described as a demand for immediate payment of income tax for the current and immediately preceding year. Generally, the IRS calls for immediate payment if there may be indications that the taxpayer and/ or the taxpayer’s assets may suddenly become unfindable for tax purposes.
26 U.S. Code section 6851, titled Termination assessments of income tax, states in (a)(1), Authority for making, in general:
“If the Secretary finds that a taxpayer designs quickly to depart…or…do any other act …tending to prejudice …proceedings to collect the income tax for the current or the immediately preceding taxable year…the Secretary shall immediately make a determination of tax,,,. The Secretary shall immediately assess the amount of the tax … shall cause notice of such determination and assessment to be given the taxpayer, together with a demand for immediate payment…”.
The list of possible ‘other acts’ by the taxpayer includes:
Remove his property from the U.S.
Conceal himself or his property therein
A corporation distributing all or part of its assets in liquidation or otherwise
The taxpayer signs the form under penalties of perjury, affirming that he has examined the statements on it and that “to the best of his knowledge and belief, they are true, correct, and complete”.
Completing Form 1040-C
Form 1040-C is used by both Form 1040 filers and Form 1040 NR filers. It has two main pages, with the blank certificate of compliance on the second page,
Two pages of schedules follow, labelled
Schedule A – Income,
Schedule B – Certain gains and losses from sales or exchanges
Schedule C – Itemized deductions
Schedule D – Tax computation
The instructions run 10 pages, including the current year tax rate schedule
The instructions start with “What’s New” which outlines how tax code changes such as the Tax Cuts and Jobs Act (TCJA) affect current year taxation. They explain how TCJA applies to the two individual final tax returns, Form 1040 and Form 1040NR. They point out when 2017 tax code can be used for sections of the form. And they point out that there may be further tax code changes after the date you complete the 1040-C, which may affect your final income tax return for the year.
The form and instructions are generally self-explanatory. Read them thoroughly. A few notes:
Page 3 – Refund – If Form 1040-C shows you have overpaid the required taxes, a refund will be paid out only after you file the final form and it, too, shows a refund.
Page 3 – Exceptions to Needing a Sailing Permit – the full list is printed. The waiver of non-immigrant privilege that, if signed, disqualifies a taxpayer from this exception is the USCIS I-508, IRC section 247 waiver signed by applicants for a green card.
Page 4 – Records you should bring to the appointment at the IRS TAC office when applying for the certificate of compliance
Page 4, Note, – Additional documents a married taxpayer living in a community property state needs to bring about the spouse’s situation. Community property states are: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin. Each community property state has different community property tax rules. If you have moved from one community property state to another, be clear on the rules that apply.
Page 5 – Residency tests: green card and Substantial Presence Test (SPT) rules.
Page 5 – Dual-status tax year considerations
Page 5 – Tax under IRC Section 877 – Aliens who were U.S. citizens or long-term residents and have expatriated follow special tax rules. This note points out that affected tax payers use the Section 877 rules when completing Form 1040-C.
Page 6 – Various taxes a taxpayer might need to include on Form 1040-C tax calculation, such as social security tax, net investment tax, and household employer tax.
Page 7, line 5, and Note, and page 8 – income exempt by the Internal Revenue Code. All the examples on page 8 concern income that is exempt from U.S. income tax by provisions in the IRC.
None of them are related to treaty-based exclusions.
Looking at Form 1040-C
Line 4 asks if the taxpayer has a permit to reenter the United States. This could be any document which states that it is valid for re-entry into the U.S. It could be a visa, a border crossing card, a work authorization card, etc.
Line 5, as noted above, asks if the taxpayer signed the USCIS I-508 waiver, concerning IRC section 247, while applying for a green card.
The taxpayer signs the form under penalties of perjury, affirming that he has examined the statements on it and that “to the best of his knowledge and belief, they are true, correct, and complete”.
https://www.irs.gov/pub/irs-pdf/i1040c.pdf