Before departing the U.S., certain noncitizens must obtain from IRS a certificate of compliance. This document is also popularly known as a “sailing permit” or “departure permit.”
One of two forms is filed with IRS:
- Form 1040C, U.S. Departing Alien Income Tax Return: This form is used by persons leaving the U.S. to report both income received and income reasonably expected to be received during the tax year.
- Form 2063, U.S. Departing Alien Income Tax Statement and Annual Certificate of Compliance is filed by persons with no taxable income or by resident aliens who will be returning to the U.S. and whose tax liabilities are current.
The statutory requirement to get a certificate of compliance is found at 25 U.S.C. section 6851(d). See also 26 C.F.R. § 1.6851-2; Publication 519, U.S. Tax Guide for Aliens; 9 FAM 602.2-3(C)(2).
Our law firm does not provide tax advice, so please discuss this matter with your tax specialist.
Who Does Not Need a Certificate of Compliance?
Some examples of persons who do not need a certificate of compliance are:
- Certain F-1, F-2, H-3, H-4, J-1, J-2, M-1, M-2, Q-1, Q-2, or Q-3 nonimmigrants
- Certain B-1, B-2, or C-1 nonimmigrants
Who Needs a Certificate of Compliance?
Some examples of persons who do need include:
- Lawful permanent residents
- E-1, E-2, H-1, H-2, L-1, L-2, O-1, O-2, or P nonimmigrants
When To Get a Certificate of Compliance
You should get your certificate of compliance at least 2 weeks before you plan to leave. You cannot apply earlier than 30 days before your planned departure date. Do not wait until the last minute in case there are unexpected problems. Apply at your nearest Taxpayer Assistance Center (walk-in IRS office). Locate the nearest office by calling (800)829-1040 or visiting IRS.gov.
If you qualify to file form 1040-C instead of Form 2063, the sailing or departure permit issued with this Form 1040-C can be used for all departures during the current year. However, the Service may cancel the sailing or departure permit for any later departure if the payment of income tax appears to be in jeopardy.
Very Few Noncitizens Apply for Certificates of Compliance
Very few noncitizens apply for certificates of noncompliance, according to a 2010 U.S. Government Accountability Office report,
Tax Compliance: IRS May Be Able to Improve Compliance for Nonresident Aliens and Updating Requirements Could Reduce Their Compliance Burden. Although the law is in effect, the IRS does not enforce the filing requirement, the report says.
Filing Annual U.S. Income Tax Returns
Form 1040-C is not an annual U.S. income tax return. If an income tax return is required by law, that return must be filed even though a Form 1040-C has already been filed. The tax paid with Form 1040- C should be taken as a credit against the tax liability for the entire tax year on your annual U.S. income tax return.
What does a Certificate of Compliance Look Like?
Here’s a sample: