Tag Archive for: continuous residence

Cyrus Mehta

FAQ for Green Card Holders during the COVID-19 Period

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I have received inquiries from lawful permanent residents, or green card holders, who are outside the United States and have been unable to return to the United States in the COVID-19 period. They are unable to return either because there are no flights out of the country to the US or they feel vulnerable to contracting the infection or they may have unfortunately contracted the infection.

These green card holders are understandably concerned as their inability to return to the US is due to no fault of their own.  If a lawful permanent resident is unable to return to the US within a year, the green card technically becomes invalid for reentry to the US. This does not mean that the person ceases to be a lawful permanent resident, and it can still be asserted that lawful permanent residence has not been abandoned.

Similarly, a reentry permit allows a green card holder to remain outside the US for two years. One who is outside the US with a reentry permit must return back prior to the expiration of the reentry permit. Otherwise, if the person remains outside the US beyond the date of the reentry permit, the reentry permit is technically invalid as a travel document, although the person can still claim to be a lawful permanent resident.

Green card holders stuck outside the US have to also be mindful about their eligibility for naturalization. The eligible applicant must have at least 2.5 years of physical presence in the US in the past 5 years prior to filing the application. If the applicant has been married to a US citizen for 3 years, then the eligible applicant must have 1.5 years of physical presence in the US.  Spouses and children who obtained lawful permanent residence as a result of being subject to extreme cruelty by a US citizen are also allowed to apply for naturalization after 3 years. Furthermore, the applicant must be continuously residing in the US during the relevant 5 or 3 year period. An applicant who has been outside the US for more than six months is deemed to have broken continuity of residence. This presumption of breaking continuous residence can be rebutted if the applicant can show that the applicant did not terminate his or her employment in the United States or obtain employment while abroad; the applicant’s immediate family members remained in the United States; and the applicant retained full access to or continued to own or lease a home in the United States.

Below are my brief answers to Frequently Asked Questions (FAQ) by concerned green card holders during the COVID-19 crisis.

1.I am unable to return to the US as all flights have been cancelled in my country. Will I have any problems if I return to the US in excess of 180 days from my last departure?

If a green card holder seeks admission to the US after being outside for more than 180 days, he or she will again be considered as an applicant seeking admission into the US under INA 101(a)(13)(C)(ii). While you may be subject to more scrutiny at the port of entry as an applicant seeking admission, you will likely not be denied admission for abandoning permanent residency especially if the reason for not travelling back within 180 days was due to COVID-19 restrictions. Regardless of whether you are returning within or in excess of 180 days, there may be other grounds under which you will be treated as an applicant for admission pursuant to INA 101(a)(13)(C).

2. I am unable to return to the US as all flights have been cancelled in my country. Will I have any problems if I return to the US in excess of 1 year from my last departure?

The green card (Form I-551) is technically invalid for reentry into the US if you have spent in excess of 1 year outside the US from your last departure. If your reason for not coming back was related to COVID-19, you should apply for a Returning Resident (SB-1) Visa at the US Consulate as soon as it reopens to the public and explain that your inability to return was due to circumstances beyond your control. You must still demonstrate that you never abandoned permanent residence by demonstrating that you are returning from a temporary visit abroad, continued to  maintain ties with the US and that you always harbored an intention to resume permanent residency.

The Ninth Circuit’s interpretation in Singh v. Reno, 113 F.3d 1512 (9th Cir. 1997) of what constitutes a temporary visit abroad is generally followed:

A trip is a temporary visit abroad if (a) it is for a relatively short period, fixed by some early event; or (b) the trip will terminate upon the occurrence of an event that has a reasonable possibility of occurring within a relatively short period of time. If as in (b) the length of the visit is contingent upon the occurrence of an event and is not fixed in time and if the event does not occur within a relatively short period of time, the visit will be considered a “temporary visit abroad” only if the alien has a continuous, uninterrupted intention to return to the United States during the visit.

3. What if the US Consulate refused the SB-1 Visa, or has not resumed operations soon enough, and I have spent in excess of 1 year overseas from my last departure?

If your green card (Form I-551) has not expired, you may wish to travel directly to the US and assert at the port of entry that you never abandoned permanent residency. While this is more risky than applying for an SB-1 visa, the Customs and Border Protection official has discretion to waive you into the US even without a technically valid I-551. The CBP official may ask you to complete Form I-193, Application for Waiver of Passport and/or Visa and pay the requisite filing fee. In the event that the CBP official does not waive you into the US, as a lawful permanent resident you have the right to have an Immigration Judge review your claim, and the burden of proof is on the government through clear and convincing evidence that you abandondoned permanent residency.

4. As a result of being unable to travel back to the US, I have gone beyond the expiration date of my reentry permit?

My responses to Questions 2 and 3 are equally applicable to one who has stayed beyond the expiration date of the reentry permit.

5. Can I attempt to renew the reentry permit while stuck overseas?

No. You can only apply for a reentry permit while you are physically in the US.

6. How will my being stuck outside the US in excess of 180 days but less than 1 year impact my ability to naturalize?

You have to demonstrate that you have been physically present in the US for half of the relevant period – 5 years or 3 years (if married to a US citizen for 3 years) – preceding the filing of the N-400 application. In other words, you must demonstrate that you have physically spent at least half of 5 or 3 years in the US. Each day you spend outside the US may erase the time you have already accumulated until you get readmitted into the US and gain more days. Of course, if you have already accumulated days that exceed the threshold, you would still have sufficient time to spare.

If you are on the cusp, and will likely have less than half of the required time of physical presence in the US because of your forced stay outside the US, then you may wish to consider filing the N-400 application from overseas in order to lock in the required physical presence.

If you meet the physical presence test, you have to also demonstrate that you did not break continuity of residence, and so remaining outside the US in excess of six months will lead to a rebuttable presumption that you broke continuous residence. Under current law, one can rebut the presumption by demonstrating that you did not move your residence or seek employment overseas, or your immediate family members remained in the US. There is no accommodation in the existing rules regarding remaining outside the US due to circumstances beyond your control. Still, an applicant is nevertheless encouraged to use a COVID-19 related ground to also rebut the presumption of breaking continuity of residence.

7. How will my being stuck outside the US in excess of 1 year impact my ability to naturalize?

Unfortunately, whatever physical presence that was accumulated will be erased, and you will need to wait 4 years and 1 day before you can file Form N-400 again, provided you have the requisite physical presence as discussed above, and you have also been continuously residing during the relevant period. The USCIS Policy Manual suggests that an applicant apply after 4 years and 6 months to avoid the presumption of a break in continuity of residence.

8. Are there any exceptions if I am unable to meet the requirements of naturalization if I am stranded overseas?

Yes. Spouses of US citizens who are employed abroad for certain organizations may not need to meet the physical presence of residence requirement. Most people who avail of this exception are spouses of US citizens working for an American corporation or its subsidiary abroad that is engaged in the development of foreign trade or commerce of the US,  but see Chapter 4 – Spouses of US Citizens Employed Abroad of the USCIS Policy Manual for further details and other exceptions.

(This blog is for informational purposes, and should not be viewed as a substitute for legal advice)

 

 

 

 

 

 

 

 

 

 

 

Cyrus Mehta

THE TAXMAN COMETH: WHEN TAKING A FOREIGN EARNED INCOME EXCLUSION ON YOUR TAX RETURN CAN HURT YOUR ABILITY TO NATURALIZE

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By Gary Endelman and Cyrus D. Mehta

Maintaining continuity of residence is paramount if one wants to naturalize and become a US citizen. For an in depth discussion, we refer you to our  prior blog Naturalization In A Flat World and Gary Endelman’s recent article, The Enigma of Disruption: What Continuity of Residence In Naturalization Really Means, 17 Bender’s Immigration Bulletin 1437, August 1, 2012. Even though a naturalization applicant meets all the eligibility criteria, an examiner can still deny an application for failure to maintain the continuous residence requirement. Tax issues can further trip up the applicant, especially when one is trying to shield foreign earned income from US taxation, which this blog will focus on.

But before we do so, we provide the basic eligibility criteria for naturalization.

An applicant must meet certain threshold eligibility criteria in order to become a US citizen. Pursuant to § 316(a) of the Immigration & Naturalization Act (INA), the applicant must establish that immediately preceding the filing of the application, he or she has resided continuously within the US for at least five years after being lawfully admitted for permanent residence. If the applicant has been in marital union with a US citizen spouse for three years, the continuous residence requirement is three years instead of five years. Moreover, under INA § 316(a), the applicant must also establish that he or she has been physically present in the US for periods totaling at least half of that time and has resided within the State or district of the Service where the applicant filed the application for at least three months.

Furthermore, INA § 316(a)(2) also requires the applicant to establish that he or she has resided continuously within the US from the date of the application up to the time of citizenship. INA § 316(a)(3) requires the applicant to establish, inter alia, that he or she is still a person of good moral character during the relevant 5 or 3-year period.

INA § 316(b) states that an absence from the US of more than six months but less than one year during the 5-year period immediately preceding the filing of the application may break the continuity of such residence. INA § 316(b) notes that should such a presumption arise, it may be rebutted if the applicant can establish that he or she in fact did not abandon his or her residence during such period.

What precisely is continuous residence?  INA § 101(a)(33) defines residence as follows: “The term ‘residence’ means the place of general abode; the place of general abode of a person means his principal, actual dwelling place in fact, without regard to intent.”  But that only tells us what residence means, not continuous residence. The regulation, on the other hand, at 8 C.F.R. §316.5(c)(1)(i) tells us what is not continuous residence. It says that an absence of between six months and one year shall disrupt the continuity of residence unless the applicant can establish otherwise to the satisfaction of the Service. Thus, unless the applicant was outside the US for six months or more but less than a year, he or she should argue that there was no disruption of continuous residence. Yet the authors have known of naturalization examiners improperly clubbing two back to back lengthy trips although each one was less than 180 days.

If an applicant is out of the US for more than 180 days but less than one year, it will cause a disruption of continuity of residence but there is still hope. 8 C.F.R. § 316.5(c)(1)(i) provides examples of the types of documentation which may establish that the applicant did not disrupt the continuity of his or her residence. Specifically, the regulation provides the following examples that an applicant can submit to rebut an allegation of disruption of continuity of residence:

(A) The applicant did not terminate his or her employment in the US;

(B) The applicant’s immediate family remained in the US;

(C) The applicant retained full access to his or her US abode; or

(D) The applicant did not obtain employment while abroad.

While one is already treading on thin ice while trying to demonstrate continuous residence, shielding foreign-earned income from US taxation can create yet another chink in one’s armor when trying to rebut an allegation of disruption of continuity of residence. Many accountants may not know this, but tread with caution if you wish to naturalize and are planning to shield foreign earned income from US taxation that can protect you up to $92,900.

There are two different ways in which one can file for earned foreign income exclusion through filing IRS Form 2555. One way is by claiming to be a bona fide resident of a foreign country for an entire tax year or by declaring physical presence there for a minimum of 330 days over 12 consecutive months. The filing of Form 2555 may be viewed as further evidence of failing to satisfy the continuous residence for naturalization. One potential point for advocacy is that the filing of an IRS 2555 based on spending 330 days outside the US is more benign than claiming you were a bona fide resident of a foreign country.  The former is a mechanical application of the earned income exclusion, and if the applicant can independently establish eligibility for naturalization despite being out for 330 days, we do not see why an IRS 2555 filed on the 330 days exemption should adversely impact the applicant.   Even the USCIS Adjudicator Field Manual in Chapter 74 clearly makes a distinction between the bona fide resident exemption and the physical presence exemption, and supports our argument.

Of course, the cautious immigration lawyer may suggest to the client to simply pay foreign tax and deduct rather than protect one’s foreign income up to $92,900.    This may work where you need to pay a foreign tax that is comparable to the US tax rate, but in some countries like Hong Kong or Dubai, the tax rate is much lower or next to nothing. Or you can be working for a UN or international organization where you are totally exempt from taxes. Under such circumstances, the $92,900 deduction would benefit the applicant and may outweigh the marginal risk in the event of an abandonment claim or naturalization denial.

But this may not be the end of the argument in favor of shielding foreign earned income based on the 330 days out of the US exemption. Look at “Home on the Range: Establishing Continuous Residence and Physical Presence for Naturalization Purposes” by Julie G. Muniz and Lyndsey Yoshino,   Immigration Practice Pointers 2012-2013 Ed. (AILA) where they point out that one of the requirements for IRS 2555 is to have a tax home in a foreign country.  This is in addition to meeting either bona fide residence test or physical presence test. This is what Muniz and Yoshino say:

“Even if an LPR can meet the physical presence test… the “tax home” requirement could be fatal to continuous residence. If an LPR has a tax home in the United States, she is precluded from claiming the foreign earned income credit. However, if she claims the credit, she is implicitly indicating that she has interrupted her continuous residence, as it could appear inconsistent to both allege a foreign tax home and claim continuity of residence.”

Under IRS definitions, your tax home is generally your regular place of business or post of duty, regardless of where you maintain your family home. Your tax home is the place where you are permanently or indefinitely engaged to work as an employee or self-employed individual. If your abode is in the US, then it is not possible to claim a tax home overseas.

Although the Muniz & Yoshino article makes a good point about cautioning against claiming a tax home overseas, it can be argued that maintaining a “tax home” in a foreign country ought not to be conflated each time with the  establishment of  a bona fide residence in that country. If that is the case, any tax home in a foreign country, as the AILA article claims, is inconsistent with maintaining continuous residence in the US. For instance, even if one is out for more than 180 days but less than one year, due to a work assignment overseas, the applicant would have in any event broken continuity of residence regardless of the overseas tax home, but can still rebut the presumption under 8 CFR §316.5(c)(1)(i)(A)–(D). The tax home overseas should not in itself be an aggravating factor. What indeed could be more perilous is when one takes a foreign earned income exclusion based on foreign residence rather than physical presence, as also indicated in the Adjudicator’s Field Manual at 74 (g)(9)(B):

If the legal permanent resident declared himself or herself to be a bona fide resident of a foreign country on IRS Form 2555, that means the alien declared to the IRS that he or she went abroad for an indefinite or extended period. He or she intended to establish permanent quarters outside of the United States and he or she openly declared residence in a foreign country. [See IRS Publication 54, Chapter 4.] The applicant applying for naturalization after openly declaring residence in a foreign country on an official United States Government form will most likely be unable to fulfill the residence requirement for naturalization (see 8 CFR 316(c)(2)).

If the legal permanent resident declared himself or herself to be physically present in a foreign country on IRS Form 2555, it only means that the applicant met the IRS’s physical presence test to have a proportion of his or her income excluded form United States taxes. The applicant has not declared residence in a foreign country. [See IRS Publication 54, Chapter 4.] Eligibility for naturalization purposes may be affected if the applicant fails to establish that he or she meets the physical presence requirements or fails to establish that the absence of more than six months but less than one a year did not result in abandonment of LPR status. If the applicant applying for naturalization has sufficient physical presence in the United States for naturalization purposes or can establish that his or her LPR status was not abandoned, then the applicant can still be eligible for naturalization (see Part 3 of the Form N-400).

Think of IRS 2555 as a warning sign whose presence on your tax return will trigger a red flag when applying for naturalization during the period when the applicant needs to maintain continuous residence. This does not mean that it will always be fatal if one tries to shield foreign income from US taxation. Any tax election should only be made by permanent resident aliens after consultation with competent immigration counsel.  All those who hold “green card” status should make certain that they understand what their tax obligations are and should refer to the IRS publication concerning the tax treatment for US citizens and resident aliens abroad. Always look for the presence of those factors with the potential to demonstrate that the applicant has never disrupted continuous residence.  Our blog points out how you can defend yourself if you have based the Form 2555 filing on physical presence overseas rather than a foreign residence. Do not be discouraged if you find this hard to understand. So did Albert Einstein who famously remarked that “This is too difficult for a mathematician. It takes a philosopher.”