Louis A. DiSarno
“The exodus continues. It’s like the party’s over and the last one to leave gets stuck with the check!”
- Agent Zed, “Men in Black” (a film about aliens)
Immigration laws and tax laws frequently go hand in hand – unsurprising given how complex both can be.
For resident and nonresident aliens who wish to leave the United States, the concept of the “sailing permit” can be one of the most important items of business that must be resolved before departing. But what exactly is a “sailing permit?” (Spoiler: It has nothing to do with maritime law, marina fees, or the United States Coast Guard.)
Internal Revenue Code Section 6851(d)(1) specifies that “[n]o alien shall depart from the United States unless he first procures from the Secretary a certificate that he has complied with all the obligations imposed on him by the income tax laws,” subject to certain exceptions by regulatory authorities. This certificate, simply put, is result of the IRS’s review and concurrence that an alien is up to date with all income tax obligations and is therefore cleared to leave.
The IRS refers to this certificate in informational materials as a “tax clearance document,” but it’s also known as a “departure permit” or, more commonly, as a “sailing permit.”
As mentioned earlier, all departing resident and nonresident aliens must obtain this document, with the following exceptions: foreign diplomats, employees of international organizations, exchange students and industrial trainees, aliens who earn no U.S. income, and commuting employees who reside in Canada or Mexico whose wages have U.S. taxes withheld.
Applying for a Sailing Permit from the IRS
If you don’t meet an exception, the application for a sailing permit is done using one of two forms: Form 2063 or Form 1040-C.
Form 2063 is the simpler and easier of the two forms to prepare, but has certain conditions that must be met. Resident aliens who have taxable income but are not, in the IRS’s evaluation, leaving to avoid paying income taxes, may file this form. Additionally, resident and nonresident aliens who have no taxable income for the current and preceding year may file this form. Form 2063 is short, but more importantly doesn’t require you to calculate and pay tax. If you don’t qualify for Form 2063, your only avenue is to file Form 1040-C, which is more onerous and requires a calculation of tax before you can receive a sailing permit.
Regardless of the form you need to file, the window of time you have is limited and you’ll need quite a bit of information to make the process go as smoothly as possible. If you are a resident or nonresident alien and you think you may need to apply for the sailing permit, we stand ready to assist you in the process.
Tax Planning and Advice for Resident and Nonresident Aliens
We at Freed Maxick pride ourselves on our experience and expertise with sailing permits and other international tax matters. If you are a resident or nonresident alien, and would like to discuss your tax and compliance responsibilities, please connect with us here , or call us at 716.847.2651 to schedule a brief conversation.