Instructions for Form 8854 (2006)

Purpose of Form

If you expatriated or terminated your long-term resident status after June 3, 2004, use Form 8854 to provide the information required by sections 6039G and 7701(n).

Expatriation or Termination of Residency

For purposes of immigration and nationality law, the date of your expatriation or termination of residency depends on when certain acts occurred. The specific acts that must have occurred depend on whether you are a former U.S. citizen or a former U.S. long-term resident (LTR). The specific acts are described below.

Former U.S. Citizens

If you were a U.S. citizen, you expatriated:

On the date you renounced your U.S. citizenship outside the United States before a diplomatic or consular officer of the United States pursuant to paragraph (5) of section 349 of the Immigration and Nationality Act, provided there is a determination of loss of citizenship by the Secretary of State, as reflected by your receipt of an approved Certificate of Loss of Nationality, or
On the date you voluntarily performed an act of expatriation with the specific and contemporaneous intention of giving up your U.S. citizenship, provided there is a determination of loss by the Secretary of State, as reflected by your receipt of an approved Certificate of Loss of Nationality. An act of expatriation is any act defined as a potentially expatriating act either by paragraph (1), (2), (3), or (4) of section 349(a) of the Immigration and Nationality Act or by any other Act of Congress defining expatriating acts.

While your citizenship may have ended because a federal court revoked your naturalization under section 340 of the Immigration and Nationality Act, this type of loss of citizenship is not treated as an expatriating event for purposes of section 877 and this form, if after the revocation, you hold the status under the Immigration and Nationality Act of an alien lawfully admitted for permanent residence.

Former U.S. Long-Term Residents (LTRs)

If you were a U.S. long-term resident (LTR) (see Definitions below), you terminated your residency:

On the date you voluntarily abandoned your lawful permanent resident (LPR) status by filing Department of Homeland Security Form I-407 with a U.S. consular or immigration officer, and the Department of Homeland Security determines that you have, in fact, abandoned your LPR status,
On the date you became subject to a final administrative order for your removal from the United States under the Immigration and Nationality Act and you actually left the United States as a result of that order, or
If you were a dual resident of the United States and a country with which the United States has an income tax treaty, on the date you commenced to be treated as a resident of that country and you determined that, for purposes of the treaty, you are a resident of the treaty country. See Treas. Reg. Section 301.7701(b)-7 for information on other filing requirements for such individuals.

Definitions

Former U.S. LTR. You are a former U.S. LTR if you were a lawful permanent resident of the United States for at least 8 of the 15 consecutive tax years ending with the date of your termination of residency.

LPR. You are an LPR of the United States if you have been given the privilege, according to U.S. immigration laws, of residing permanently in the United States as an immigrant. You generally have this status if the Immigration and Naturalization Service (now the U.S. Citizenship and Immigration Services (USCIS)) has issued you an alien registration card, also known as a “green card.”

Date of Tax Expatriation

If you expatriated or terminated your long-term resident status on or before June 3, 2004, see Pub. 519.

If you expatriated or terminated your long-term resident status after June 3, 2004, until you file Form 8854 and notify the Department of State or the Department of Homeland Security of your expatriating act or termination of residency, your expatriation or termination of residency for immigration purposes will not relieve you of your obligation to file U.S. tax returns and report your worldwide income as a citizen or resident of the United States. For purposes of U.S. tax rules, the date of your expatriation or termination of residency will be the later of the date you notify the relevant agency of your expatriating act or termination of residency, or the date this form is filed in accordance with these instructions. For purposes of determining the date on which this form is filed, apply the rules of section 7502. Generally, this is the postmark date.

Who Must File

You must file Form 8854 to:

Establish that you have expatriated or terminated your LTR status for tax purposes, or
Comply with the annual information reporting requirements of section 6039G, if you are subject to tax under section 877.

Note. If you were a naturalized citizen, but lost your citizenship because a federal court revoked your naturalization under section 340 of the Immigration and Nationality Act, you do not need to complete this form if, after the revocation, you hold the status under the Immigration and Nationality Act of an alien lawfully admitted for permanent residence. You must complete this form, however, if you were a naturalized citizen and you gave up your citizenship by expatriation under section 349 of the Immigration and Nationality Act.

Taxation under section 877. You are subject to taxation under section 877 if you are a former U.S. citizen or former LTR, and any one of the following applies to you.

Your average annual net income tax liability for the 5 years ending before the date of your expatriation or termination of residency is more than the amount listed below.
1. $124,000 if you expatriated in 2004.
2. $127,000 if you expatriated in 2005.
3. $131,000 if you expatriated in 2006.
This amount is subject to cost-of-living adjustments. The IRS will announce the amounts applicable to future years in annual revenue procedures that will be published in the Internal Revenue Bulletin. The Internal Revenue Bulletins can be accessed at www.irs.gov/irb.
Your net worth is $2 million or more on the date of your expatriation or termination of residency.
You fail to certify on Form 8854 that you have complied with all of your U.S. federal tax obligations for the 5 years preceding the date of your expatriation or termination of residency.

Exceptions to Section 877

Provided you have certified that you have met your tax obligations for the 5 tax years prior to your expatriation or termination of residency, you will not be subject to tax under section 877(b) if either of the following exceptions applies.

You became at birth a U.S. citizen and a citizen of another country, you continue to be a citizen of the other country, and you have no substantial contacts with the United States.
You became at birth a U.S. citizen, neither of your parents was a U.S. citizen at the time of your birth, your loss of citizenship occurred before you attained age 18½, and you were not present in the United States for more than 30 days during any of the 10 calendar years preceding your loss of citizenship.

See the instructions for lines 9 and 10 on page 3.

Tax Consequences of Presence in the United States After Expatriation or Termination of Residency

If, for any tax year during the 10-year period in which you are otherwise subject to section 877, you are present in the United States for more than 30 days in a calendar year ending in such tax year, you will be treated as a U.S. citizen or resident for that tax year. You will be subject to U.S. tax on your worldwide income unless the following exception applies.

Exception. You can be present in the United States for up to 60 days without being treated as a U.S. citizen or resident if you are performing personal services in the United States for an employer who is not related (within the meaning of sections 267 and 707) to you and you meet either of the following requirements.

You were a U.S. citizen and, within a reasonable period following your expatriation, you became a citizen or resident fully liable to tax in the country in which either you, your spouse, or either of your parents were born, or
For each year in the 10-year period ending on the date of expatriation or termination of residency, you were physically present in the United States for 30 days or less.

See Pub. 519, U.S. Tax Guide for Aliens, for details about what constitutes a day of presence in the United States.

When To File

Initial Information Statement

If you are filing this form because you ceased to be a U.S. citizen (expatriated) or terminated your U.S. residency during the tax year, there is no due date for filing this form. However, until you both file this form with the Internal Revenue Service and notify either the Department of State or the Department of Homeland Security of your expatriation or termination of residency, you will continue to be treated, for tax purposes, as if you were still a U.S. citizen or resident. The date of your tax expatriation (the date you are no longer subject to U.S. taxation on a worldwide basis) is the date on which you have satisfied both requirements.

Annual Information Statement

If you are a nonresident alien filing this form to comply with the annual information reporting requirements of section 6039G, this form should be attached to a timely filed Form 1040NR, U.S. Nonresident Alien Income Tax Return, and a copy of the form should be sent to the address below. If you are not required to file Form 1040NR, submit this form to the address below by the due date for filing Form 1040NR.

If you are present in the United States following your expatriation and are subject to tax as a U.S. citizen or resident, file Form 8854 with your Form 1040 and send a copy to the address listed below.

Where To File

Internal Revenue Service
11511 Roosevelt Boulevard
Drop Point S607-F8854
Philadelphia, PA 19154

General Instructions