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IRS Policy Change U.S. Residency Applications

On Monday, April 4, the Internal Revenue Service (IRS) issued a policy change for U.S. residency applications and Form 8802, effective for the next two years. The change comes as the IRS hopes to alleviate the current heavy load of paperwork resulting from a number of still unprocessed tax returns from last year, and also as the IRS monitors the policy change to determine its extension beyond the two-year period.

In a post on the IRS website, the IRS explained, “…if you received a request from the IRS for a signed copy of your most recent return to support an application for a U.S. residency certification because your return had not yet been posted by the IRS by the time you filed your Form 8802, you will only need to submit a signed copy of the current year base income tax return (i.e., the tax return without any accompanying forms, schedules, or attachment (for example, Form 1120, pages 1-6, Form 1120-REIT, pages 1-5, etc.)) rather than a copy of your entire return.”

Form 8802 applies to U.S. persons looking to certify that they are U.S. tax residents to apply a reduced treaty withholding rate in a foreign jurisdiction on certain types of foreign-sourced income. Some treaty partners in foreign jurisdictions will require a certification from the IRS in order to apply the reduced rate of withholding. If you have a question regarding how the new policy change to Form 8802 affects your tax situation or residency application, please contact your Windham Brannon advisor, or reach out to Brandi Samuel.