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Where Taxpayers and Advisers Meet

UK USA tax, once Green Card abandoned

Joined:Mon Sep 13, 2021 1:56 pm
UK USA tax, once Green Card abandoned

Postby Vag80 » Mon Sep 13, 2021 2:53 pm

I am hoping that someone can give me some pointers.

20 years ago I was living and working in US on a Green Card. (1997 until 2008)
In 2008 I resigned, sold up and returned to the UK
I have not returned to the US since.
In 2010 my green card expired. I took no action to renew it, having departed.
I believe i have never filed a form i-407 (giving formal notice of abandonment)
I became UK resident and UK taxpayer and have since remained as such.

After leaving the US I was advised that as a green card holder ( at least in those first years, 2008,2009,2010 etc) I had an obligation to continue to file for Federal taxes since i was still considered a "US Person" or LTR (Long Term Resident) because i met the 8 year test. I therefore continued to file a 1040. (BTW: I was specifically advised to file a 1040 and NOT to file 1040NR). By default and habit I have continued to file a 1040 each year ever since. And Also FBAR. I am retired and my financial activities are very low key and thus the overhead of a US filing was not that onerous.

However, recently, a new tax adviser has told me that it is NOT necessary for me to be filing US taxes to IRS.
Why? Because my green card is deemed abandoned and therefore I no longer have an obligation. I have no US financial interests or activities such as active US investments and I have never returned (even to visit) to US since leaving in 2008
However my old tax adviser says that I should definitely continue.
Wonderful situation. Unfortunately I cannot get them in the same room.

To check if my green card is administratively and formally deemed abandoned at INS (and thus perhaps makimg a difference to my US tax obligation), I decided to call the INS, gave my card number and the agent simple said that they never record ANY such official status, such as "abandoned" for any card. She just said that after a year it probably would have been deemed abandoned and if i felt like it i could submit a form i407. My point is that there seemed to be no formal method of recording status of abandonment anyway!..against any card number.

Looking at the IRS guidance notes.. (quote)
<<. Lawful Permanent Resident: You generally have this status if you have been issued an alien registration card, also known as a "green card," and your green card hasn't been revoked or judicially or administratively determined to have been abandoned, and you haven't 1) commenced to be treated as a resident of a foreign country under the provisions of a tax treaty , 2) waived the benefits of such treaty, and 3) notified the IRS of such a position on a Form 8833 attached to an income tax return. If you were already an LTR at the time you cease to be treated as a lawful permanent resident, then you will be treated as having expatriated as of that date.>>

The above IRS instruction notes indeed suggest that if card is deemed abandoned (and since I commenced to be resident in UK) then I no longer have an obligation.

My questions
1) Am i still a "US Person" or an LTR??

2) Do you think i have an ongoing obligation to file for federal taxes eg 1040? What is the deciding factor?

3) Is there an official state of abandonment on a Green Card and how will it affect the above?

I appreciate any thoughts and comments.

Joined:Thu Aug 16, 2012 4:31 pm

Re: UK USA tax, once Green Card abandoned

Postby DavidTreitel » Tue Sep 14, 2021 7:30 pm

US law is clear. Until the green card is abandoned or revoked , you remain a US person subject to US tax and annual reporting. You have said nothing suggesting that the green card has ever been abandoned or revoked or that you have filed a treaty-based US income tax return. Before abandoning the green card, you'd want to investigate if you might be subject to US expatriation tax. These issues are common and something we see in our practice most weeks.

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