Form I-407 & How to Prepare to Give Up Permanent Residency

What is Form I-407?

Form I-407 Voluntary Abandonment of Legal Permanent Residence: The Form I-407 Voluntary Abandonment of Legal Permanent Residence process is a relatively simple USCISForm. The Form is required in order to abandon or relinquish a legal permanent resident’s U.S. person status. Merely allowing the green card to lapse or expire does not per se end the person’s U.S. status.  The U.S. government wants to keep track of individuals and their U.S. status. And, with foreign accounts compliance at an all-time high, it is important to properly submit the form, analyze “covered expatriate” status, file form 8854 (if required), and exit the U.S. tax system.

We summarize Form I-407 and How to Prepare to Give Up Permanent Residency.

What is Form I-407?

Voluntary Abandonment of Legal Permanent Residence

Form I-407 is used to relinquish a Green Card and give up Legal Permanent Residence Status. From the U.S. perspective, the green card is more than just a card. It represents that the person is a U.S. person and has complied with the rules and requirements to be considered a legal permanent resident. While it comes with several benefits — tax is not one of them. Therefore, when it is time to hang it up and relinquish the U.S. status, the green card holder must take affirmative action.

Lawful Permanent Resident vs Green Card

It is important to note that the Green Card is a representation of permanent resident status. The green card in and of itself does not mean anything. For example, if a Legal Permanent Resident were to misplace or lose their green card — they do not lose their U.S. status. Conversely, just because the card expires does not mean a person is no longer considered a U.S. person for tax purposes. While it may subject the person to potential removal and other issues, the mere fact that the green card expires does not mean that the legal permanent resident status expired as well. Rather, a person remains a U.S. person until they have taken affirmative action.

Generally, the process can be completed relatively easily by simply filing the form.

We will review the requirements for filing the form.

The Purpose of USCIS Form I-407 

Form I-407 is used to formally abandon legal permanent resident status. The form is not a tax form, but rather it is an immigration form published by the USCIS (United States Citizenship and Immigration Service).

As provided by USCIS:

• • • “Form I-407, Record of Abandonment of Lawful Permanent Resident Status, is designed to provide a simple procedure to record an individual’s abandonment of status as a lawful permanent resident (LPR) of the United States.

    • Use of Form I-407 also ensures that an individual abandoning his or her LPR status is informed of the right to a hearing before an immigration judge and that the individual has knowingly, willingly, and affirmatively waived that right.”

The U.S. government wants individuals to be sure they want to relinquish their U.S. status. The form is used as an easy way to complete the process (for the green card holder) and protects the government from any claim by the person that they did not “voluntarily” relinquish their status.

Who Files Form I-407?

As further provided by USCIS:

• • • “Form I-407 is used by lawful permanent residents who are outside the United States or at a Port of Entry who want to abandon their LPR status. Form I-407 may also be used by individuals who were admitted into the United States as non-immigrants or paroled into the United States after abandoning a prior LPR status, and who now want to record that prior abandonment of LPR status.

    • Generally, if a parent abandons LPR status, any minor children in that parent’s custody will also have abandoned their LPR status.

    • If a parent, custodial parent, or legal guardian chooses to file a separate Form I-407 on behalf of a minor child, the parent, custodial parent, or legal guardian must show that he or she has custody of the minor child.

    • Form I-407 is also used by U.S. Department of Homeland Security (DHS) officials and U.S. Department of State (DOS) consular officers to record the facts relating to individuals who abandon LPR status during an in-person interview or by correspondence.”

Before Filing Form I-407, Are You Tax Compliant?

One of the biggest mistakes that Taxpayers make when they are ready to give up their U.S. person status is to file the I-407 before they are in tax compliance for the past five (5) years. This is especially important for taxpayers who are considered Long Term Lawful Permanent Residents (LTRs) — which typically means a Taxpayer was a U.S. Lawful Permanent Resident for at least eight of the past 15 years. If a taxpayer files USCIS Form I-407 before they are in tax compliance, they may become a covered expatriate by default. Another important fact to consider is that the Taxpayer does not have to be a Lawful Permanent Resident for a full eight years. If they became an LPR any time during a year within eight of the past 15 years the IRS takes the position that that is sufficient to count towards making them an LTR. For Taxpayers who are not in compliance, they can submit an offshore disclosure prior to submitting the form I-407 to ensure they are tax compliant at the time they are ready to expatriate

Late Filing Penalties May be Reduced or Avoided

For Taxpayers who did not timely file their FBAR and/or other international information-related reporting forms, the IRS has developed many different offshore amnesty programs to assist Taxpayers with safely getting into compliance. These programs may reduce or even eliminate international reporting penalties.

Current Year vs. Prior Year Non-Compliance

Once a Taxpayer missed the tax and reporting (such as FBAR and FATCA) requirements for prior years, they will want to be careful before submitting their information to the IRS in the current year. That is because they may risk making a quiet disclosure if they just begin filing forward in the current year and/or mass filing previous year forms without doing so under one of the approved IRS offshore submission procedures. Before filing prior untimely foreign reporting forms, Taxpayers should consider speaking with a Board-Certified Tax Law Specialist who specializes exclusively in these types of offshore disclosure matters.

Avoid False Offshore Disclosure Submissions (Willful vs Non-Willful)

In recent years, the IRS has increased the level of scrutiny for certain streamlined procedure submissions. When a person is non-willful, they have an excellent chance of making a successful submission to Streamlined Procedures. If they are willful, they would submit to the IRS Voluntary Disclosure Program instead. But, if a willful Taxpayer submits an intentionally false narrative under the Streamlined Procedures (and gets caught), they may become subject to significant fines and penalties. 

Need Help Finding an Experienced Offshore Tax Attorney?

When it comes to hiring an experienced international tax attorney to represent you for unreported foreign and offshore account reporting, it can become overwhelming for Taxpayers trying to trek through all the false information and nonsense they will find in their online research. There are only a handful of attorneys worldwide who are Board-Certified Tax Specialists and who specialize exclusively in offshore disclosure and international tax amnesty reporting.  *This resource may help Taxpayers seeking to hire offshore tax counsel: How to Hire an Offshore Disclosure Lawyer.

Golding & Golding: About Our International Tax Law Firm

Golding & Golding specializes exclusively in international tax, specifically IRS offshore disclosure.  Contact our firm today for assistance.