While most foreign nationals are interested in the different avenues of obtaining a U.S. green card, for those who are fortunate enough to have obtained the permanent resident status but are now faced with increasing tax obligations or employment opportunities overseas, the abandonment of their permanent residence may be a realistic option they are contemplating. This article aims to provide a brief overview on how this process works, and address a few common issues relating to the abandonment of permanent resident status.
In order to abandon one’s permanent resident status, a lawful permanent resident (LPR) must file Form I-407, Record of Abandonment of Lawful Permanent Resident Status. Unlike many applications seeking a certain immigrant or nonimmigrant benefit, this form does not come with filing fees and it can be filed at a USCIS international field office, U.S. Embassy, U.S. Consulate, or at a U.S. port of entry. In filing a Form I-407 application, a lawful permanent resident (“LPR”) must surrender his/her Form I-551 (Permanent Resident Card) along with the originally signed I-407 form. Generally speaking, this statement should be signed under oath before the Department of Homeland Security or a consular officer. However, if the individual submits the application by mail, he/she must include in the statement “I certify under penalty of perjury under United States law this statement is true and correct.”
Unlike other immigrant or nonimmigrant petitions or applications that require adjudication by USCIS, there is no adjudication of Form I-407, except that an interview may be conducted if there is any indication the individual is not abandoning his/her permanent status voluntarily. An individual’s permanent resident status is determined to have been abandoned and terminated on the date of receipt of the Form I-407 by USCIS or a U.S. consular officer. Nevertheless, there may still be a processing timeline until the individual receives an executed copy of the Form I-407 signed by USCIS or a consular officer. Generally speaking, if the foreign national makes an appointment with a USCIS international field office, the field office may be able to provide a copy of the executed Form I-407 on the date of the appointment.
Prior to abandoning permanent residence, it is recommended that an LPR speak to a tax attorney to determine the tax consequences of abandoning permanent residence. Per IRS regulations, an LPR who wishes to abandon his/her permanent residence may need to file a statement (Form 8854) with the IRS to establish the residency termination date. This statement must be attached to the individual’s income tax returns, and contain certain required biographic information and sufficient facts to establish that the individual’s status as a permanent resident has been abandoned.
Similar to renouncing one’s U.S. citizenship, abandoning one’s permanent resident status may result in substantial tax obligations for certain permanent residents. Since June 17, 2008, the United States has imposed an enormous “exit tax” or “expatriation tax” on the permanent residents who fall under the following criteria:
- Have held the green card for any part of eight (8) out of the previous fifteen (15) years; and
- (a) Have a net worth, considering all assets worldwide, of U.S. $2 million or more on the date of termination of residency; or
- (b) Have an average annual income tax liability of more than a specified amount that is adjusted for inflation ($151, 000 for 2012, $155,000 for 2013, $157,000 for 2014, and $160,000 for 2015) for the 5 years ending prior to the termination of residency; or
- (c) Fail to certify on Form 8854 that the permanent residents have complied with all U.S. federal tax obligations for the 5 years preceding the date of termination of residency.
For those LPRs who fall under the above criteria, abandoning their permanent resident status may result in substantial financial consequences. They may need to seek the advice of tax advisors in determining the specific amount of tax obligations they are liable for and whether the abandonment of permanent resident status should be their preferred course of action given the tax consequences.
Finally, while abandoning one’s permanent resident status does not affect the individual’s ability to immigrate to the United States sometime in the future, he/she will have to begin the process anew and apply through the usual application process. For those intending to visit the United States as a nonimmigrant in the future after abandoning their LPR status, they will need to obtain nonimmigrant visas in the categories applicable to them.
It is important to note that most nonimmigrant visas, other than a select few that allow for dual intent such as H-1B and L visas, do not permit immigrant intent. Therefore, it may be more difficult for the individual to show his/her nonimmigrant intent after previously being an LPR. Nevertheless, this hurdle may be overcome if the former LPR can show he/she has strong ties with his/her country of residence at the time and therefore has no intent of immigrating to the United States. The individual may also use the countersigned copy of the Form I-407, which is the proof of termination of permanent residency, as evidence of his/her clear nonimmigrant intent.
The decision to abandon one’s permanent resident status is a serious decision and may come with significant tax and immigration consequences. As such, it is advised that those who consider abandoning their LPR status consult with both immigration counsel and tax counsel prior to making the decision.