Sailing Permit: What Aliens Need to Know about their Departure from the United States

Ashley Erwin, CPA

As you prepare to go back to your home country, your current year income tax return may cross your mind, but probably is not perceived as a priority for getting out of town. If returning permanently, you may be thinking that, at year-end or the beginning of the next year, you'll inform your CPA that you're no longer in the U.S. and you can move forward with your last U.S. income tax return.

However, certain aliens are not permitted to leave the United States, even temporarily, without obtaining a sailing or departure permit to certify that your U.S. tax obligations have been satisfied according to available information, and that your departure will not jeopardize the collection of U.S. income tax. Basically, the IRS is trying to make sure you have enough tax paid in for the current year, and that you've filed prior year income tax returns at the time you leave in case they never hear from you again.

Obtaining the sailing permit requires a visit to your local IRS office and significant documentation—including but not limited to—your passport, letter from employer, travel itinerary, prior year income tax returns and current year tax return documentation. It is advised that you apply for your sailing permit two weeks before you are scheduled to leave and you cannot apply more than thirty days before your departure date. There are two Forms that may be completed in order to obtain your sailing permit: Form 2063, U.S. Departing Alien Income Tax Statement and Form 1040-C, U.S. Departing Alien Income Tax Return. Each includes a certificate of compliance section, which becomes your sailing permit after it is signed by an agent of the Field Assistance Area Director. Form 2063, the simpler of the two forms, asks only a few questions and does not require a tax computation. The following departing aliens may obtain their sailing permit by filing Form 2063:

• Aliens, whether resident or nonresident, who have had no taxable income for the tax year up to and including the date of departure and the preceding tax year
• Aliens who have received taxable income during the tax year or preceding tax year and whose departure will not hinder the collection of any tax
• Resident aliens who are leaving only temporarily

All others must file Form 1040-C. On Form 1040-C you must report all income received, or reasonably expected to be received, during the tax year up to and including the date of your departure and the tax on this income must be paid. Form 1040-C is very similar in format to Form 1040 and Form 1040NR. You are still required to file Form 1040 or 1040NR (whichever applies) for the year you depart, and you will receive a credit for any tax paid with Form 1040-C.

There are categories of aliens who are not required to obtain sailing permits depending on their reason for being in the U.S., the type of income received and the type of visa acquired. These aliens include foreign diplomats, employees of international organizations and foreign governments whose income is exempt from tax, alien students, trainees, exchange visitors and visitors for pleasure and business (if here less than ninety days). All other aliens must obtain a sailing permit.

There are few reports of agents requesting sailing permits at departure, but in recent years, the U.S. has become more diligent in its collection of taxes from resident and nonresident alien taxpayers. The sailing permit rule is something which they could begin to enforce to step up this effort of alien tax compliance. And, because it is within U.S. law, not being able to present a sailing permit could legally prevent you from leaving.

Please contact us if you would like additional information relating to the sailing permit or to discuss your specific situation.