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26 USC 6039G for Loss of US Citizenship
26 USC 6039G for Loss of US Citizenship
Internal Revenue Code section 6039G refers specifically to information required by individuals who are losing United States Citizenship — which is typically done by renouncing US Citizenship at a foreign consulate/embassy. The requirements for US citizens to renounce their US citizenship is much more complicated (from an expatriation standpoint) than for a Long-Term Lawful Permanent Resident who maintains permanent residency status for eight of the last 15 years — and did not claim foreign residence during any of those years by making a Form 8833 treaty election. For permanent residents, they can typically relinquish their US person status by filing USCIS Form I-407 instead of having to go through the lengthy Department of State forms 4079 through 4083. Let’s go through the specific code section (6039G) and briefly summarize the requirements:
26 USC 6039G
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(a) In general
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Notwithstanding any other provision of law, any individual to whom section 877(b) or 877A applies for any taxable year shall provide a statement for such taxable year which includes the information described in subsection (b).
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(b) Information to be provided Information required under subsection (a) shall include—
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(1) the taxpayer’s TIN,
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(2) the mailing address of such individual’s principal foreign residence,
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(3) the foreign country in which such individual is residing,
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(4 )the foreign country of which such individual is a citizen,
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(5) information detailing the income, assets, and liabilities of such individual,
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(6 )the number of days during any portion of which that the individual was physically present in the United States during the taxable year, and
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(7) such other information as the Secretary may prescribe.
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(c) Penalty
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If—
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(1) an individual is required to file a statement under subsection (a) for any taxable year, and
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(2) fails to file such a statement with the Secretary on or before the date such statement is required to be filed or fails to include all the information required to be shown on the statement or includes incorrect information, such individual shall pay a penalty of $10,000 unless it is shown that such failure is due to reasonable cause and not to willful neglect.
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(d) Information to be provided to Secretary
Notwithstanding any other provision of law—
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(1) any Federal agency or court which collects (or is required to collect) the statement under subsection (a) shall provide to the Secretary—
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(A) a copy of any such statement, and
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(B) the name (and any other identifying information) of any individual refusing to comply with the provisions of subsection (a),
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(2) the Secretary of State shall provide to the Secretary a copy of each certificate as to the loss of American nationality under section 358 of the Immigration and Nationality Act which is approved by the Secretary of State, and
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(3) the Federal agency primarily responsible for administering the immigration laws shall provide to the Secretary the name of each lawful permanent resident of the United States (within the meaning of section 7701(b)(6)) whose status as such has been revoked or has been administratively or judicially determined to have been abandoned. Notwithstanding any other provision of law, not later than 30 days after the close of each calendar quarter, the Secretary shall publish in the Federal Register the name of each individual losing United States citizenship (within the meaning of section 877(a) or 877A) with respect to whom the Secretary receives information under the preceding sentence during such quarter.
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Form 8854 and IRC 6039G
In order to comply with the international reporting requirements of Internal Revenue Code section 6039G, the IRS developed international reporting Form 8854 — which is filed by US Citizens and Long-Term Lawful Permanent Residents who give up their US status. Form 8854 is relatively detailed — especially in situations in which the US Taxpayer qualifies as a covered expatriate — because in that case, the taxpayer then has to calculate the potential exit tax based on their various assets; domestic & foreign deferred compensation and specified tax-deferred accounts.
The code section refers to two (2) other important expatriation code sections 877 and 877A:
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IRC 877: Expatriation to Avoid Tax
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IRC 877A: Tax Responsibilities of Expatriation
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If the taxpayer does not properly file Form 8854, they may become subject to penalties of $10,000 — although these 6039G penalties may be avoided or abated (removed) if the taxpayer can show that any noncompliance was due to reasonable cause and not willful neglect.
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