Here is my background:

I became a permanent resident of the USA in 2009 and surrendered it in 2015.
Hence, I was a permanent resident of the USA for total 7 years only (2009 to 2015). So I am not a Long-Term-Resident (LTR) of USA (as per IRC 877(e)(2)).
In 2017, I sent my residency termination statement to IRS (for TAX year 2015).


Recently I have received a correspondence from IRS asking me to file Form-8854(year 2015) and this correspondence mentions: “If you expatriated or terminated your U.S. residency, or you are subject to the expatriation rules you must file Form 8854.”

I downloaded the instruction for Form-8854(2015) from www.irs.gov (http://www.irs.gov/) and in this instruction file I see the followings:


(In Page-1) Long-term resident (LTR) defined: You are an LTR if you were a lawful permanent resident of the United States in at least 8 of the last 15 tax years ending with the year your status as an LTR ends. In determining if you meet the 8-year requirement, don't count any year that you were treated as a resident of a foreign country under a tax treaty and didn't waive treaty benefits applicable to residents of the country.



(In Page-2): Expatriation After June 16, 2008: The rules in this section apply to persons who are considered to have expatriated after June 16, 2008.


Who Must File: You must file an initial Form 8854 if you relinquished your U.S. citizenship or terminated your long-term residency status.

Apart from this, I also looked into the section IRC 877A(g)(2) which says: "The term “expatriate” means - (A) any United States citizen who relinquishes his citizenship, and (B) any long-term resident of the United States who ceases to be a lawful permanent resident of the United States (within the meaning of section 7701(b)(6)).".

Hence, as per this section 877A(g)(2), I am not an "expatriate" because I am not a Long-Term-Resident (LTR) as per IRC 877(e)(2).

Now my questions are:

Question-1:
As I am not a Long-Term-Resident (LTR) of the USA, my understanding is that I need not file Initial-Form-8854 (year 2015). Is my understanding correct?

If my understanding is incorrect and I have to file Form-8854, then please let me know the IRC codes/clauses that mandate so.

Question-2:
If I need not file Initial-Form-8854 (year 2015) then, do I need to file Annual-Form-8854 for the year 2015 or 2016 or any year(s) thereafter?

Question-3:
Note that, I have a 401(k) account in USA. Do I need to file Annual-Form-8854 for the year 2015 or 2016 or any year(s) thereafter because of this 401(k) account?

I am thinking to write a letter to IRS explaining my details and asking for the reason for them to instruct me to file Form-8854(2015).

Your comments/suggestions will be very helpful.

Regards,
pbiswas13

The 401K is NOT an issue in determining residency status.

This is what I suspect the problem to be: you failed to submit the Residency Termination Statement in a timely manner.

You submitted your Residency Termination Statement for 2015 in 2017, whereas the deadline for submission for 2015 was 30 June 2016. The IRS considers you to be a resident until they receive the Residency Termination Statement. If my interpretation of the rules is correct, the IRS is counting 2016 as a year of residency, in which case you DO qualify as a LTR if Calendar Year 2016 is counted.

I recommend you contact the IRS at 267-941-1000 (you can call collect). Wait until Wednesday or Thursday to call. The lines are busiest on Monday and Tuesday.

Explain the situation to the IRS representative and ask WHY they want the Form 8854.

Hello AtlantaTaxExpert,

Thanks for your quick response.

Along with the letter, that I have received from IRS, I have also received Form-8854 (year 2015). Why would IRS ask me to fill-up Form-8854 for year 2015 if they consider me a USA resident till 2016?

I have already called IRS help line 267-941-1000 regarding this matter. The customer service representative suggested me to write down all my questions and sent those to IRS in response to the correspondence that I have received.

Regards,
pbiswas13

If that is what the IRS representative told you to do, then write the letter.

Give very specific timelines as to when you arrived and departed, providing a copy of your visa with the entry and exit date stamps as proof of the timeline.