Thinking of Expatriating? You May Be Leaving More Behind Than You Expected

Posted in Expatriates, Tax Issues

taxU.S. citizens and long-term permanent residents who are considering relinquishing their U.S. citizenship or long-term permanent residency in the U.S. have more than just the exit tax imposed under Code § 877A to consider – they must also consider the impact the expatriation will have on their U.S. family members and other intended U.S. beneficiaries.  Once final regulations are published for the tax imposed under Code § 2801, a U.S. recipient of gifts and bequests from certain individuals who have relinquished their U.S. citizenship or long-term permanent residency in the U.S. (a so-called Covered Expatriate) will need to file a new Form 708, U.S. Return of Gifts or Bequests from Covered Expatriates (Form 708), to report all such gifts and bequests received since June 17, 2008 from a Covered Expatriate and pay the tax that is due.[i]

Gifts and Bequests Considered Covered Transfers

Code § 2801 imposes a tax on any U.S. citizen or resident who receives a “covered gift” or a “covered bequest” from a Covered Expatriate, regardless of when the Covered Expatriate acquired the transferred property or the situs of the property.  The tax imposed by Code § 2801 is assessed at the highest gift or estate tax rate in effect at the time of the transfer (40% in 2016).  Whether the transfer is a “covered gift” or a “covered bequest” depends on whether the donor or decedent is a Covered Expatriate.  A Covered Expatriate is an individual who relinquished his or her U.S. citizenship or terminated his or her long-term permanent resident status on or after June 17, 2008 and, on the date of his or her expatriation, the individual either meets a U.S. income tax liability test (in 2016, $161,000 average net income tax liability over five years, indexed annually for inflation), or meets a net worth test of $2 million (not indexed annually for inflation), or fails to certify, under penalty of perjury, that he or she has complied with all U.S. tax obligations for the five preceding taxable years.

There are notable exceptions for transfers that are properly reported by the Covered Expatriate (or his or her personal representative) on timely filed gift or estate tax returns (for example, a gift of U.S. real property that is reported on a gift tax return), or for transfers to charitable organizations or certain spouses as long as the transfer would qualify for the estate or gift tax charitable or marital deduction.

Are You Subject to Code § 2801 Tax?

The burden for reporting a covered gift or bequest and paying the Code § 2801 tax is placed on the U.S. recipient.  These obligations relate back to June 17, 2008 and include all covered gifts and bequests received since that date.  Further, under the proposed regulations the U.S. recipient also has the burden of determining whether he or she received a covered gift or bequest – meaning the U.S. recipient must determine whether the donor or decedent is or was a Covered Expatriate.  The proposed regulations provide that, with the consent of the expatriate (if living), the U.S. recipient may request that the IRS disclose certain return information of the expatriate.  However, the IRS will not make a determination of the expatriate’s status.  This means it is very important for each U.S. individual who has received a gift or bequest from an expatriate to start collecting information from the expatriate or his or her estate now to determine whether that gift or bequest will be subject to the Code § 2801 tax so that he or she will be prepared to file a Form 708, if required, once final regulations are published.

Planning Ahead

Expatriates:  U.S. citizens and long-term permanent residents who are thinking of expatriating may consider making pre-expatriation gifts to U.S. recipients to take advantage of their lifetime gift tax exemption ($5,450,000 in 2016 reduced by prior year taxable gifts) and reduce the post-expatriation Code § 2801 tax consequences for their intended U.S. beneficiaries.  In addition, since a U.S. recipient of a covered gift or bequest is allowed an annual exclusion amount under Code § 2801(c) equal to the gift tax annual exclusion amount ($14,000 in 2016), the Covered Expatriate may consider limiting their annual gifts to U.S. recipients to this Code § 2801(c) amount.

U.S. Recipients:  Given the Code § 2801 tax rate of 40%, a U.S. recipient of a prior or future covered gift or bequest will need to set aside adequate funds for payment of the tax liability.  Further, if a U.S. individual expects to receive a large covered gift or bequest from a Covered Expatriate, he or she may consider relinquishing his or her own citizenship or residency before receiving such gift or bequest.

See the full IRS Proposed Regulations here.
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[i] Under the proposed regulations, the Form 708 will be due on or before the 15th day of the 18th calendar month following the close of the calendar year in which the covered gift or bequest is received, giving most U.S. recipients ample time to gather the information necessary to file the return.  U.S. recipients who receive a covered gift or bequest before the final regulations are published will be given a reasonable period of time to file the Form 708 and pay the Code § 2801 Tax.

Employer’s Use of E-verify is Not a Substitute for Completing I-9 Forms, Fined More Than $200K in Civil Penalties

Posted in Department of Homeland Security, I-9 Audit, Immigration and Customs Enforcement (ICE)

ICEIn the Final Decision and Order dated April 27, 2016, Administrative Law Judge Ellen K. Thomas ordered Golden Employment Group, Inc. (Golden Employment), a staffing and temporary-employment company, to pay $209,600 in civil penalties for 465 Form I-9 violations.

Golden Employment, which receives between 2,000 and 3,000 applications each year and has more than 20,000 people in its database, began using E-verify in 2008 to verify an employee’s employment eligibility with the Department of Homeland Security and the Social Security Administration.  In some cases, Golden Employment would fail to complete certain sections of Form I-9 when an employee’s eligibility for employment was verified by E-verify.

In April of 2013, Golden Employment received a “Notice of Inspection” from Immigration and Customs Enforcement (ICE), the federal agency charged with reviewing a company’s I-9 compliance standards.  ICE gave the company five days to provide Form I-9s for review.  On April 15, Golden Employment provided four boxes of I-9s to ICE.  In May and June, the company gave more boxes of I-9s to ICE, but these submissions were treated as untimely by ICE.

Under 8 U.S.C. § 1324a(b) and 8 C.F.R. § 274a.2(b), an employer is required to complete and maintain I-9s for each of its employees.  Failure to properly complete or maintain I-9s can subject an employer to hefty fines.  For each individual I-9 with violations, an employer can be fined a minimum penalty of $110 and a maximum penalty of $1100.  When determining the appropriate penalty to asses against an employer, the following five factors are considered:

  1. The size of the employer’s business;
  2. The employer’s good faith;
  3. The seriousness of the violations;
  4. Whether the individual in question was an unauthorized alien; and
  5. The employer’s history with previous violations.

After a consideration of the five factors, ICE recommended a fine of $605 per violation because it found an error rate of 35 percent in its review of Golden Employment’s provided I-9s.  The government considered the size of Golden Employment as a mitigating factor that warranted a reduction in the overall penalty.  However, the government felt that Golden Employment’s failure to complete I-9s for some employees or timely provide I-9s for review warranted a higher penalty.  The remaining factors—good faith, absence of unauthorized workers, and lack of previous violations—were treated as neutral.

Golden Employment asserted that the government incorrectly excluded the I-9s that it provided to ICE late, which, when considered, would result in a total fine of $63,250 at most.  In addition, Golden Employment contended that while some I-9s were in fact incomplete, because the company also verified an employee’s employment eligibility through E-verify, these acts, when taken together, should satisfy the I-9 requirements under the law.

In her Order issued on April 1, 2016, Judge Thomas found that Golden Employment committed 465 I-9 violations.  Specifically, Judge Thomas found Golden Employment liable for 140 violations for failing to timely present I-9 forms; 236 violations for not preparing or presenting I-9 forms; and 89 violations for failing to properly complete I-9 forms.  Having committed 465 I-9 violations, Judge Thomas could have assessed civil penalties against Golden Employment ranging from $51,150 to $511,500.  Further, Judge Thomas stated that using the E-verify program does not “insulate an employer from the necessity of proper I-9 completion” and cannot be relied upon by employers as a substitute for the employment eligibility verification requirements under the law.

In her decision to assess a civil penalty of $209,600 against Golden Employment, Judge Thomas noted that Golden Employment’s failure to prepare I-9 forms at all for some employees  “frustrate[d] the national policy intended to ensure that unauthorized aliens are excluded from the workplace,” thereby warranting a higher penalty.  Concerning the other factors, Judge Thomas found that Golden Employment acted in good faith, thus warranting a reduction in overall penalty.

Golden Employment should serve as a warning to employers who use the E-verify program that E-verify is not intended to replace an employer’s obligation to prepare and maintain I-9 forms for each of its employees.

House Judiciary Committee to Consider Visa Integrity and Security Act of 2016

Posted in Department of Homeland Security, Immigration and Nationality Act, Immigration Law, Immigration Reform, National Security, Visas

Today, the House Judiciary Committee will consider H.R.5203, the Visa Integrity and Security Act of 2016.  The bill is authored by Representative Randy Forbes of Virginia.

The bill’s purpose is to enhance security procedures for the processing of both immigrant and nonimmigrant visas.  We provide a sectional summary of the bill below.

Section 2 of the bill adds new section 211A to the Immigration and Nationality Act (INA) to require that all petitions and applications filed with the Department of Homeland Security (DHS) or a consular officer contain all required signatures.  In the case of immigrant visa applications, the bill requires that each application shall be signed in the presence of the consular officer, and verified by oath.  Section 211A also specifies that all documentation provided in support of either an immigrant or nonimmigrant visa must be translated into English.  Section 211A requires that no petition or application may be approved until any additional information requested by DHS or a consular officer is provided consistent with any deadline specified in the request.

New section 211B mandates that background checks be conducted for all petitioners or applicants to determine whether an individual poses a “national security threat” or is otherwise ineligible for a visa or admission to the United States.  The background check required in this section “shall include” a review of each individual’s social media activity.  Further, the section requires that for nationals of Iran, Iraq, Libya, Somalia, Syria, Sudan, Yemen, or another country the DHS Secretary “determines appropriate,” a security advisory opinion must be completed prior to issuance.  The section outlines certain exceptions to this requirement.

In the case of petitions and applications based upon a biological relationship, section 211B requires that a genetic test must be obtained proving the biological relationship between petitioner and beneficiary, and that such test must be submitted at the time of application.  The bill specifies that the test shall be obtained at the expense of the petitioner or applicant.  Finally, the section requires that DHS must conduct an in-person interview with every person seeking “any benefit” under the INA, with the exception of a work authorization.  The section permits the Secretary to waive this requirement for individuals 10 years of age or younger.

Section 3 directs DHS to prepare a plan for the use of “advanced analytics” software to detect immigration benefit fraud and potential national security threats.  Section 3 also requires DHS to complete a benefit fraud assessment by fiscal year 2021 for the following visa categories: VAWA self-petitioners, visas issued under section 101(a)(15)(K) (spousal and fiancé), visas issued under section 101(a)(27)(J) (juvenile), visas issued under section 101(a)(15)(U) (U visas for victims of crime or those aiding law enforcement), visas issued under section 101(a)(27)(C) (special immigrant—minister), applications for asylum under section 208, applications for adjustment of status under section 209, and petitions for visa or status under section 201(b).

Section 4 provides authority to the Secretary of State to impose surcharges to support visa security activities.  Section 4 also amends the Homeland Security Act of 2002 to require, within four years following enactment of the bill, the assignment of DHS personnel to “each diplomatic and consular post at which visas are issued.”  The section spells out the requirements for cooperation from the Department of State to implement this requirement.

Section 5 of the bill amends section 291 of the INA concerning the burden of proof upon a petitioner or applicant for an immigration benefit.  The proposed amendment would change the current standard, “to the satisfaction of the consular officer” to the standard that each individual prove eligibility or admissibility by “clear and convincing” evidence.

Finally, Section 6 mandates a report to be conducted by the Government Accountability Office (GAO) to “review and report to Congress on the security of nonimmigrant and immigrant visa application processes.”

GT will monitor the House Judiciary Committee’s consideration of this legislation and will provide updates here in relation to the bill’s progress in the House of Representatives.

DHS Extends TPS for Nicaragua and Honduras

Posted in Department of Homeland Security, TPS

Central AmericaThe Department of Homeland Security (DHS) has extended Temporary Protected Status (TPS) for eligible nationals of Nicaragua for an additional 18 months, effective July 6, 2016, through Jan. 5, 2018.  Individuals with TPS must re-register during the 60-day re-registration period that runs from May 16, 2016, through July 15, 2016.

Likewise, DHS also extended TPS for eligible nationals of Honduras for an additional 18 months, effective July 6, 2016, through Jan. 5, 2018.  Individuals with TPS must re-register during the 60-day re-registration period that runs from May 16, 2016, through July 15, 2016.

The 18-month extensions allow TPS re-registrants from Nicaragua and Honduras to apply for a new Employment Authorization Document (EAD). Those applicants who re-register during the 60-day period and request a new EAD will receive one with an expiration date of Jan. 5, 2018.  USCIS is also automatically extending current Nicaraguan and Honduran TPS EADs with a July 5, 2016, expiration date for six months. These existing EADs are now valid through Jan. 5, 2017, as USCIS recognizes that re-registrants may not receive a new EAD card before the current EAD expires.  Employers must accept a TPS-related EAD that is expired on its face if it nevertheless remains unexpired based on an automatic extension of the EAD by DHS.

To qualify for Nicaraguan or Honduran TPS, the applicant must satisfy the following criteria:

  • Be a national of Nicaragua or Honduras, or a person without nationality who last habitually resided in Nicaragua or Honduras;
  • File during the open initial registration or re-registration period, or meet the requirements for late initial filing during any extension of Nicaragua’s TPS designation;
  • Maintain continuous physical presence in the United States since Jan. 5, 1999; and
  • Reside continuously in the United States since Dec. 30, 1998.

Applicants over the age of 14 must also undergo security checks, and those with a criminal record or who pose a threat to national security are not eligible for TPS. Applicants may also request a fee waiver from USCIS from the application by submitting the appropriate request.

Greenberg Traurig Attorneys Recognized as “Rising Star” by Pennsylvania Super Lawyers

Posted in Firm News

Pennsylvania Super Lawyers magazine recognized attorneys Matthew Galati and Jennifer Hermansky as a “Rising Stars” in Immigration law for 2016.  According to the Super Lawyers website, the Rising Star selection process is based on peer recognition and professional achievement, as well as a third party research. Hermansky has been ranked as a Super Lawyer since 2014.  This is Galati’s first time on the Rising Stars list.

To read the full press release, click here.

Canada Border Services Reminds LPRs Travelling to Canada by Air of eTA Requirements

Posted in Canada, Canada Border Services Agency, CBSA, Electronic Travel Authorization, Lawful Permanent Residents, LPR

The Canada Border Services Agency (“CBSA”) issued a reminder to Lawful Permanent Residents (“LPRs”) of the United States regarding new guidance for travelling to Canada by air.  The Electronic Travel Authorization (“eTA”) is a new Canadian entry requirement for visa-exempt foreign nationals travelling to Canada by air, which went into effect on March 15, 2016. Visa-exempt foreign nationals who fly to or transit through Canada are expected to have secured eTA first. Exceptions to this requirement include U.S. citizens and travelers with a valid Canadian visa (see full list of exemptions).  LPRs of the United States need an eTA before boarding a flight to Canada as of March 15, 2016.

Until September 29, 2016, travelers who do not have an eTA can board their flight, as long as they have appropriate travel documents, such as a valid passport.  The Border Services officers can admit travelers without an eTA into the country, but they will remind travelers of the new requirement.

LPRs travelling to Canada should apply for an eTA, which costs $7 Canadian.  In most cases, an eTA is granted within minutes of applying.  The eTA is linked to your passport and is valid for five years or until the passport expires, whichever occurs first.  The eTA is valid for each entry during this time and travelers must enter Canada using the same passport that was used when applying for the eTA.

For LPRs enrolled into the NEXUS program, the passport used to apply for the eTA will need to be the same passport used when the LPR enrolled into the NEXUS program.  Otherwise, the LPR cannot continue to use the expedited service through the NEXUS self-serve kiosks.  If you were issued a new passport since you joined NEXUS or used another document to apply, you must visit a NEXUS Enrolment Centre and have the passport that is linked to the eTA also linked to the NEXUS membership.

Greenberg Traurig Hosts 6th Annual Out Leadership Summit

Posted in Diversity, Events, Firm News

14875-Carousel-HRLast week, Greenberg Traurig and Executive Chairman Richard A. Rosenbaum hosted the sixth annual Out Leadership Summit in the U.S., where senior executives gathered to engage in the global conversation at the intersection of LGBTI and business.

Out Leadership is a recognized and trusted strategic advisory firm, dedicated to cultivating LGBTI and ally senior leaders to create global business opportunities. Out Leadership counts more than 69 member firms across a variety of industries, including finance, law, and insurance, all of whom rely on its insights, initiatives, and strategic consulting to expand their share of the $3 trillion global LGBTI market, attract top talent, and advance LGBTI equality.  Many Greenberg Traurig leaders and professionals attended the Out Leadership summit, including Laura Reiff, Co-Chair, Business Immigration and Compliance Practice, and Ian Macdonald, Atlanta Business Immigration and Compliance Practice Leader.

To learn more about how Greenberg Traurig is involved, click here.

 

The New STEM OPT Program: the Good, the Bad, and the Ugly

Posted in Immigration and Customs Enforcement (ICE), OPT, STEM

STEM OPT

The new STEM OPT program became effective on May 10, 2016, and represents a complete overhaul of how this program has operated since 2008.  For the uninitiated, STEM stands for Science, Technology, Engineering, or Mathematics; and OPT stands for Optional Practical Training.  As previously reported, F-1 students with qualifying STEM degrees are now eligible for a 24-month extension of OPT work authorization.

The new program’s most positive change is that it has lengthened the extension from 17 months to 24 months. But these generous provisions are accompanied by several new requirements for participating employers.

Employers should determine whether the benefit of a longer tenure with its existing student employees outweighs these new “bad and ugly” administrative burdens. Here are some basic facts and tips to help make that determination:

  • Under the new program, employers must complete the Form I-983 training plan.  This training plan must be completed by the student and the employer and should detail how the student’s job duties relate to the student’s STEM degree, as well has how the employer can contribute to the student’s professional development.
  • There is an annual self-evaluation requirement.  According to the new program, the student must complete an annual self-evaluation (similar to an annual performance evaluation) or will lose their status.  The employer must sign off on this evaluation. Employers should consider reminding students of this requirement.
  • The employer must make certain attestations.  Because of this, it is important to maintain documentation regarding the required attestations, including that the student is not replacing a US worker and that the student is being paid commensurate with similarly situated workers; the employer may even wish to consider making a memo to the file explaining the basis for the student’s wage.
  • There are reporting requirements. Employers and students are each subject to reporting requirements.  Employers should consider reminding students of their reporting requirements, such as checking in with the Designated School Official (DSO) every six months or so.  Both the  employer’s  and employee’s reporting requirements should be timely and should include reporting any material change to the student’s training plan as well as any material change in the student’s employment.
  • There may be site visits.  Employers must know and be prepared for the fact that Immigration and Customs Enforcement (ICE) has authority to make site visits with 48-hour notice, unless the visit is triggered by report of noncompliance. The scope of these ICE visits is generally limited to confirming STEM OPT employment and attestations and that the training plan is being followed.

e-Passport Mandatory for the Visa Waiver Program

Posted in Department of Homeland Security, E-visa Process, E-Visas, U.S. Customs and Border Protection (CBP), Visa Waiver Program, Visas

passport, map, sim cardsOn May 9, 2016, the Department of Homeland Security (DHS) Customs and Border Protection (CBP) released a statement clarifying that as part of the Visa Waiver Program Improvement and Terrorist Travel Prevention Act of 2015, those individuals utilizing the Visa Waiver Program (VWP) with an Electronic System for Travel Authorization (ESTA) to travel to the United States must have an e-Passport as of April 1, 2016.  This was initially announced in August 2015 to give foreign travelers notice to obtain a new passport, if necessary.  If a traveler does not have an e-Passport but is otherwise eligible to travel under the VWP, he or she will need to apply for a valid nonimmigrant visa obtained from a U.S. Embassy or Consulate abroad before traveling to the U.S.

The e-Passport is an enhanced secure passport that has an embedded electronic chip.  It conforms to international standards for securing and storing information for both the passport and the passport holder.

Inquiries for Certain Petitions Pending for 210 Days or More

Posted in Immigrant Visa, USCIS

Current regulations allow for nonimmigrant workers in certain statuses (A-3, E-1, E-2, E-3, G-5, H-1B, H-1B1, H-3, L-1, O-1, O-2, P-1, P-2, P-3, and, TN) to continue authorized employment with the same employer for up to 240 days after the status has expired if the employer has timely filed an extension of stay request and it remains pending.

Due to current processing times, as of April 21, 2016, USCIS is now allowing petitioners that file Form I-129, requesting either an extension of status or a change of employer, to contact USCIS after the petition has been pending for 210 days or more, for a status inquiry based upon the petition being outside of normal processing times.

The employer, or attorney of record, may submit the inquiry by calling the National Customer Service Center at 1-800-375-5283.  When making the inquiry, please ensure that the original receipt number can be provided.

GT will monitor the effectiveness of this USCIS initiative and post updates to our blog.

 

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