shutterstock_171174860U.S. Citizenship and Immigration Services (USCIS) has announced the release of a new version of Form I-407, Record of Abandonment of Lawful Permanent Resident Status.  It is important to note that voluntarily relinquishing lawful permanent resident status may be beneficial for certain individuals and preferable to being deemed to have abandoned it.  Why would someone want to give up their lawful permanent resident status (green card) in the United States considering the numerous challenges associated with achieving this great benefit?

If the individual moves to another country with the intention of making it their primary domicile, it is likely the individual will be deemed to have given up their green card and will not be admitted back into the United States as a lawful permanent resident.  As such, keeping the green card or trying to maintain it after having permanently relocated abroad may be detrimental for a number of reasons, including tax consequences and/or expense of trying to enter the United States with the abandoned green card and being turned around.  What can often happen is that the person is deemed to have abandoned his/her green card but still is obligated to pay U.S. income taxes on worldwide income. 

The filing of Form I-407, Record of Abandonment of Lawful Permanent Resident Status, is therefore advantageous in certain situations.  By filing the form, an individual is able to officially abandon their lawful permanent residency status in the United States.  The form can be filed at a U.S. Embassy or Consulate abroad and requires the surrender of the green card.  The consular officer’s role entails accepting and processing Form I-407; there is no adjudication of Form I-407 whereby the consular official makes a determination of abandonment of status.  When filing in person, the Consulate may choose to interview those individuals where there is reason to believe the individual is not acting voluntarily in their decision to abandon lawful permanent residency.  There is no fee to file Form I-407 at the U.S. Embassy or Consulate.  Once abandoned, the consular officer will provide the individual with a formal signed copy of the form.

Generally, in abandoning the green card an individual is relieved from future U.S. federal income tax obligations so long as the appropriate tax clearance procedures and related documentation have been followed and completed.  However, certain green card holders who have held such status eight out of the last 15 years may be subject to the U.S. expatriation regime which generally taxes such person, subject to an exemption amount, on the gain resulting from a deemed sale of all of their worldwide assets at such assets’ fair market value immediately before such expatriation.  Even after abandonment of a green card, a former green card holder could still be a U.S. tax resident by virtue of spending a significant amount of time in the United States.  Moreover, the official signed Form I-407, received after the consular appointment/interview, demonstrates the individual’s clear intent of relinquishing immigrant/lawful permanent resident status and can be used when filing for future visas to enter the United States.  For example, after formally abandoning the green card, an individual can present this evidence when filing for a tourist visa in order to demonstrate non-immigrant intent.

Please note the current edition is dated 2/26/2015 and USCIS will not accept earlier editions of the form after 3/23/2015.  Effective March 26, 2015, the new form will officially be implemented at U.S. Consulates worldwide.  The decision to abandon status as a lawful permanent resident and/or file Form I-407 should be taken seriously. It is recommended that you consult with both immigration counsel and tax counsel prior to making the choice to abandon lawful permanent resident status.