Posted by Elliot Kravitz, ATP

Alien Clearance (Sailing Permit)

Alien Clearance (Sailing Permit)

Before leaving the United States, all foreigners (except those listed below) must obtain a "Certificate of Compliance" from the United States Internal Revenue Service. This document is also known as a "sailing permit" or "exit permit," must be obtained from the IRS before leaving the United States. Here are some things you need to know about sailing permits:

Filing with the IRS

To obtain a "sailing permit," a departing foreign national must submit a Form 2063 or 1040-C to the IRS (as applicable). A foreigner's departure cannot be registered earlier than thirty (30) days before the departure date. Both forms have a "Certificate of Compliance" segment, which, when approved by the IRS, certifies that the tax obligations of the departing alien in the United States have been met based on the information available. The copy of the signed certificate form 1040-C, or Form 2063, is the "Sailing Permit." Foreigners are advised to obtain a "sailing permit" from an Internal Revenue Service office around their employment. However, it can also be obtained from an IRS office in the departure area.

Form 2063

This short-form does not include tax calculations. The following departing aliens can obtain a "sailing permit" by submitting Form 2063:

  • Foreigners, residents or non-residents, who have not received taxable income during the financial year up to and including the departure date and the previous year, if the tax reporting period of that year has not expired; and

  • Foreign residents who have accumulated taxable income during or before the financial year and whose departure does not prevent taxes.

Foreigners belonging to one of these categories who have not filed an income tax return or income tax paid during a financial year must file income tax and pay income tax before they can receive a "sailing permit" on Form 2063. However, if the IRS has information indicating that foreigners are leaving to avoid paying income taxes, they must complete Form 1040-C.

Form 1040-C 

In general, all income received or reasonably expected during the fiscal year up to the date of departure, including the date of departure, must be reported on Form 1040-C, and Applicable Taxes must be paid. When a foreigner leaving pays a tax that appears to be due on Form 1040-C and files all returns and pays all taxes due in previous years, he will receive a "sailing permit." Please note that the IRS may allow an outgoing foreigner to make a deposit guaranteeing payment instead of paying taxes from previous years.

Husbands and Wives

Husbands and wives, who are non-resident foreigners, cannot submit joint returns. However, suppose one of the spouses is a resident alien. In that case, a joint return on Form 1040-C may be filed if (a) both spouses are reasonably eligible to file a joint return at the end of the normal fiscal year; and (b) the fiscal years of the spouses end on the same date.

Identification Number

In general, the departing foreigner must enter his/her social security number ("SSN") or his/her tax identification number ("ITIN"). To request an SSN, obtain Form SS-5 from a Social Security Administration Office or call SSA at 1-800-772-1213. Complete the SS-5 form and return it to the SSA. If a foreigner does not have an SSN and is not eligible to obtain it, they must apply for an ITIN. It typically takes 4-6 weeks to get an ITIN. If you already have an ITIN code, enter it where your SSN is required.

Documents to bring to the IRS office

The processing of a "sailing permit" will be faster if the following documents regarding US income and residency of departing aliens are brought (if applicable) to the IRS office.

  • A statement from each employer is indicating the salaries paid and taxes withheld from January 1 of the current year until the date of departure, if you are an employee. If you are self-employed, bring an income tax and tax return before your scheduled departure date. 

  • Copies of US income tax returns filed within the past two years. If you have lived in the United States for less than two years, bring the declaration that you submitted for that period.

  • Document proving your US taxpayer identification number, such as a Social Security card or a CP 565 issued by the IRS, showing your taxpayer identification number ("ITIN").

  • Document verifying the date of departure from the United States, such as an airline ticket.

  • Documents are indicating eligibility for any benefit arising from the required special tax treaties.

  • Documents proving any gain or loss on the sale of personal property, including fixed assets and property.

  • Documents relating to scholarship or research include verification of grantor, source, and purpose of the scholarship.

  • Income from income tax paid for these returns.

  • Passport and visa or registration card for foreigners.

  • Proof of estimated tax payments last year and this year.

  • Receipts, bank statements, canceled checks, and other documents proving deductions, business expenses, and dependents declared in their profitability.

Foreigners who do not need a "sailing permit."

If the departure from abroad falls into one of the following categories, you do not need to obtain a "sailing permit":

  • Visa F-1, F-2, H-3, H-4, J-1, J-2, Q-1, Q-2 or Q-3, or the spouse or child of the person, if no income has not received income from in the United States, in addition to 

  1. interest on deposits, if such interest is not related to a business or business in the United States; 

  2. subsidies covering the cost of studies or training; or employment income permitted by United States immigration law.

  3. A student, or a student's spouse or child, on an M-1 or M-2 visa, if you have not received any income in the United States other than interest on deposits if that interest is not related to a US business or corporation; or employment income permitted by United States immigration law.

  • While traveling on business, you hold a B-1 visa or a combined B-1 / B-2 visa or are present in the United States without a visa and not staying in the United States for over 90 days during the year.

  • Travel for fun and on a B-2 visa.

  • A foreign government representative who holds a diplomatic passport or member of the representative's family or accompanying official.

Conclusion

This article is intended to provide practical and useful information on this subject. However, no legal or tax services are provided or rendered via this article. US tax issues are particularly complicated. If tax assistance is required, you should hire the services of a competent tax professional.



Elliot Kravitz, ATP
Contact This Member