Pretty sure the IRS made a typo in Publication 519

There’s a provision that allows aliens in the U.S.[1] to choose to be treated as a U.S. resident for tax purposes even if they would not otherwise qualify as a resident. Income tax rules themselves are already really confusing — and they are even more complicated for foreigners in the U.S. — so a typographic error could really confuse a taxpayer.

I think the IRS made a typographic error, but I’m not even sure how to get in touch with them to fix this.

Motivating example

Suppose you arrive in the U.S. for the very first time on October 1, 2015 to work for the foreseeable future on a TN-1 (NAFTA Professional) visa. Because the period from 2015-10-01 to 2015-12-31 is insufficient to meet the Substantial Presence Test,[2] you would otherwise be a nonresident alien for tax year 2015. This would mean your income in the United States might be subject to taxation in the U.S. as well as in your home country. What if you wanted to be treated as a resident alien starting on October 1, 2015 — despite not satisfying the Substantial Presence Test?

This is the First-Year Choice, and it’s documented in Publication 519 (“U.S. Tax Guide for Aliens”) by the IRS.

The error

I got a little confused when I first read the rule, because it seemed to require an impossibility:

2015 Publication 519 typo on page 7

Let me excerpt that to show why it’s so self-contradictory: “If you do not meet either the [GCT] or the [SPT] for 2014 … but you meet the [SPT] for 2014.”

Huh? Clearly they meant 2016 there. Moreover, if you met the SPT for 2014, the current tax year — 2015 — wouldn’t be your first year in the U.S.

This is confirmed by the bulleted list on the following page:

2015 Publication 519 excerpt from page 8

Motivating example resolved

If you are going to satisfy the Substantial Presence Test in the following tax year — 2016 — you can choose to pretend to be a U.S. resident from 2015-10-01 to 2015-12-31 as well, if you meet all of the requirements in the bulleted list above.

 

Footnotes

Footnotes
1 Foreigners, not extraterrestrials.
2 The Substantial Presence Test (SPT) requires, in its simplest form, at least 183 days of physical presence within the United States in a three-year period.

A new blog series?

Over dinner this week, I was revealed as one of those weirdos who actually read the fine print. Yep, once in a while—embarrassingly often—I’ll actually dig right into those long documents that come with the health insurance, the credit card offer, or the website signup.

Forced arbitration clause in Amex Premier Rewards Gold cardmember agreement.
When was the last time you actually read something like this?

Why? Because the purpose of these “Terms and Conditions,” or “Cardmember Agreements,” or whatever else they’re calling these lengthy, prewritten, one-sided contracts, is to modify default legal rules/rights in such a way that benefits the parties that wrote them. So, even if I don’t have any practical choice in whether or not to use Facebook, even if I can’t really negotiate with American Express and rewrite the terms of the extended warranty, at the very least it’s useful to know what my rights are—and what hidden benefits there might be that most people don’t know about.

So a friend thought it might be fun if I just occasionally write about these things. Perhaps a sort of Bad Terms & Conditions section on my blog, or … Digging through the Fine Print

Still working on the name.

I’ll try not to fall into the bad habit of labelling companies “fascists” or something similarly colourful, which other blogs highlighting these issues inevitably find themselves doing. (I mean, literally every company that deserves any business does it, so what’s a conscientious consumer to do?) For what it’s worth, Consumerist already writes about this and does a pretty good job of it.

Continue reading “A new blog series?”

Another startup blatantly steals university trademarks

A friend directed my attention to a startup-y website selling “cheap smartphone [insurance] coverage” for “as little as $3 a month”. Right at the top of the Penn-branded subdomain (penn.getcovered.co) was an iPhone mockup showing the Penn shield:

GetCovered ripping off Penn seal

highly doubt they went through all the trouble of actually licensing the trademark from the university. Penn’s policy on use of its logos by external entities provides (emphasis added):

Outside sponsors of University programs or activities often seek to use University names or insignia in promotional or advertising materials. While the University is pleased to recognize the contributions of sponsors, such recognition must not suggest University endorsement of the sponsor’s activities. Therefore, University names or insignia may not be used in connection with any outside entity’s name or logo without prior approval of the Secretary of the University. In general, the Secretary will approve uses which recognize or acknowledge the sponsor’s contribution to the University program or activity. Uses which, in the Secretary’s judgment, may suggest University endorsement or approval of the sponsor’s goods or services will not be permitted.

The big issue, of course, is the risk of confusion — by consumers, etc — who might think that the service is sponsored or endorsed by the university. There would be a pretty good prima facie case for trademark infringement, especially since the registrant behind the domain name appears to be a Stanford grad with no connection to Penn.

But to top it all off, the site seems to be lying on its face. The Penn page includes a quote from a “Leah B, Philadelphia, PA”:

Leah B, Philadelphia, PA quote

but the exact same quote is used on the non-Penn-branded homepage of GetCovered, this time from “Leah B, Washington, DC”!

Leah B, Washington, DC quote

As an alum, I certainly don’t want the university’s shield to be used in connection with this company. What they’re doing is strangely reminiscent of the Campus Backup service that OCM was marketing a few years ago — which shut down after my blog post overtook their site in search engines.

Update (2015-11-02): a quick Google search of the opening sentence of the quote directed me to the source — a 2012 comment on a Gawker post by a Gawker contributor, no obvious connection to GetCovered.

I get to vote!

… at least in this federal election.

After Elections Canada’s letter requesting my intended date of return, I responded by postal mail declaring a future date that should accommodate my intended career development in the United States. Needless to say, that intended date was pretty far into the future. At the close of my letter, I stressed that the Canada Elections Act has no statutory time limit on the intention to return:

I also write to emphasize that I became a nonresident of Canada upon acquiring residence in the United States on ****** **, 2014. Therefore, I am within the five-year limit on actual time abroad recently reinstated by the Court of Appeal for Ontario, even if my intended return would be beyond five years, since the applicable statute imposes no temporal restriction on the intended date of return for an eligible elector “who… (c) intends to return to Canada to resume residence in the future.” Canada Elections Act, S.C. 2000, c. 9, § 222(1).

I look forward to receiving a special ballot from your office at the upcoming election.

This week, I received the special ballot voting kit, which includes a guide pamphlet, ballot paper, an inner envelope, an outer envelope, and a preaddressed envelope.

Voting kit for special ballot
Voting kit for special ballot

* As far as I am aware (and yes, I’ve checked), it is not illegal in Canada or Ontario to photograph this kit, provided that no vote has been marked. I haven’t yet decided for whom I will vote, so this photography serves simply as an illustration of what to expect for Canadian expats, rather than as evidence of my vote.

Hopefully this won’t be the last time I get to vote in Canada from abroad.

Are you a Canadian temporarily abroad?
Register to vote with Elections Canada!

A letter from Elections Canada

We are writing to request information to update the International Register of Electors. This request is a result of a July 20, 2015, ruling by the Ontario Court of Appeal, which took effect immediately.

… To receive a special ballot at the upcoming election, you must provide:

– The month and year you plan to return to Canada to reside

The implementation of this ruling demonstrates the imperfect nature of restrictions on expat voting—not only does the law have an arbitrary 5-year bar on voting from abroad, but for all expatriates Elections Canada is demanding a crystal clear declaration of the date they will return to Canada.

I think it’s worth noting that the underlying text of the statute only requires that an eligible elector “intends to return to Canada to resume residence in the future.” Canada Elections Act, S.C. 2000, c. 9, § 222(1)(c).

The agency could likely have fulfilled the statutory requirement by requiring only a simple checkbox that I do, in fact, intend to return to Canada “at some time in the future.” But that’s not what they did.

Click for the full PDFClick here for the full PDF, including the reverse side.

See also my previous two posts on this subject: Let me vote, dammit and A little more about expat voting in Canadian elections.

 

Let me vote, dammit

In Frank v. Canada (Attorney General), 2015 ONCA 536, the Court of Appeal for Ontario decided that Canadian expatriates could be denied the ability to vote after 5 years of residency abroad, in spite of the Charter clause guaranteeing citizens the right to vote, reversing an earlier court ruling that had vacated the temporal limit. Letting all citizens vote would be “unfair” to Canadians who live in Canada, apparently.

As a Canadian expat (US green card holder), I sincerely hope this case is overturned on appeal to the Supreme Court of Canada.

Like the respondents, who “attended university in the U.S. and remained there to pursue careers in their chosen professions”, my choice to be in the United States to advance my studies and career in the law is a matter of circumstance. Acquiring a green card did not signal the surrender of my citizenship and all its rights, responsibilities, and privileges.

It’s already annoying enough when the tax agencies of the two countries—CRA and IRS—use different definitions of residency for tax purposes… which differ from the governments’ definitions of residency for immigration purposes… which apparently differ from some U.S. states’ definitions of residency for driver’s licences…

… but now to convolute the meaning of a citizen’s right with a resident’s right?

I remain invested in the direction of the Canadian government and try to stay informed about Canadian politics. I still receive communications from multiple Canadian parties, am a supporter of two activist groups involved in IP and media law, and continue to engage in discourse with resident Canadians about the state of the nation.

As an individual with only one citizenship—Canadian—being disenfranchised at the end of five years from voting in Canadian federal elections would leave me with no democratic representation in any jurisdiction, since noncitizens in America are forbidden from participating in the U.S. electoral system even as a donor to any campaign. Even Canadian felons would have more political representation than I would have. This untenable situation would reasonably drive an expat to pursue foreign citizenship, if only to regain those rights and privileges that one would have expected Canadian citizenship to guarantee.[1]

The Charter doesn’t define the right to vote by residency, but by citizenship. Section 3 provides:

Every citizen of Canada has the right to vote in an election of the members of the House of Commons or of a legislative assembly and to be qualified for membership therein.

The majority opinion contends that residency has been historically a factor in implementing the electoral system that enables citizens to exercise the right to vote, but the court erroneously conflates the implementation of a constitutional right with the acceptable boundaries on that right.

It embraces the vague notion of protecting the “social contract”, a principle in which individuals who make laws must also obey them, as a legitimate purpose to restrict the voting rights of expatriates. But really, expatriates remain bound by Canadian laws, particularly those affecting taxation, citizenship, and property…[2] Laws passed in Canada, far from having “little to no practical consequences” for my expat family as the majority opinion contends, affect us financially (at least in terms of loans and taxes), affect my parents’ property and retirement assets and income, and influence our choices later down the road about whether or not to return to Canada.

… and it’s not like every resident citizen is affected by every law anyways! Bear with me for a moment; consider this perspective: the scope of a law often excludes those people who supported it. A law limiting concealed carry handguns, for instance, would probably be passed by those people who themselves have no need or desire to engage in the actions that the law prohibits. Indeed, this ruling actually enables resident citizens to violate the social contract principle supposedly being protected: a hypothetical law imposing 50% taxes on foreign income earned by nonresident citizens, for example, could be passed by representatives of resident citizens living comfortably in Vancouver and Toronto unaffected, while disenfranchised citizens abroad would be the ones affected.

This case better make its way to the Supreme Court of Canada.

Footnotes

Footnotes
1 It’s worth noting that American expatriates retain the right to vote indefinitely while abroad, and even some citizens who have never even set foot on U.S. soil can nevertheless vote in several states. Hurrah to the Constitution?
2 Increasingly in today’s world, laws that apply to surveillance and foreign intelligence, too, come to mind.