IRS Relaxes Tax Residency Requirements Amid COVID-19 Pandemic
Taxation Partner Seth Entin was cited in a TaxNotes article regarding the relaxation of tax residency requirements by the IRS amid the COVID-19 pandemic. A nonresident who is temporarily present in the United States for up to 60 consecutive calendar days because of COVID-19 travel disruptions will not be considered a U.S. resident under the IRS’s substantial presence test. The IRS provided guidance in the form of two revenue procedures and a list of frequently asked questions that outlines the tax relief qualifications and provides a path moving forward for affected individuals.
Mr. Entin said that while the guidance will provide much-needed relief to nonresident individuals, "there are bound to be individuals for whom this guidance is too narrow and who will not benefit from the relief provided." For example, an individual who becomes a green card holder on December 31 won't qualify. "Such an individual may have been expecting his or her U.S. tax residency to commence only at the end of 2020, but without any relief, the individual could become a U.S. income tax resident much earlier in the year," Mr. Entin continued.