Topic No. 858 Alien Tax Clearance – Low compliance rates, not enforced but still the law that aliens (resident or nonresident with some exceptions) are required to obtain a certificate of U.S. tax compliance – AKA "Sailing Permit") before leaving the USA https://t.co/jxHWedTjyY
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) March 18, 2023
Once upon at time (well back in the last century) I knew a person who – along with three other people – shared the rental of a house. The agreement was that they would split the rent equally and that they would split the utilities equally. The agreement also stated that on the last day of each month the group would meet and each contribute their 1/4 share of the utilities owing. The agreement further stated that in the event that any person did not pay his share of the utilities in cash that his property could be used (fair market value assessment) to pay his share. One week prior to the last day of the month one of the four realized that he would not have the money to pay his share of the utilities. As a result, two days before the last day of the month, that individual:
1. Removed all of his belongings; and
2. Moved out of the house.
The legend was that the remaining three had to pay his share of the utilities and his property remained intact. By moving out and removing his property he was able to avoid paying a debt that he owed to the group.
Unsurprisingly the Internal Revenue Code contains provisions to prevent individuals from leaving the United States or removing property from the United States to defeat the payment of tax debts. This is of particular concern to the United States if the individual is an “alien”. The requirement to obtain a “sailing permit” to leave the United States is neither well known nor enforced. That said, the “sailing permit” (even with the existence of “withholding taxes”) remains the law!