[Federal Register Volume 59, Number 42 (Thursday, March 3, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-4781]


[[Page Unknown]]

[Federal Register: March 3, 1994]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 8526]
RIN 1545-AN97

 

Certificates of Compliance with Income Tax Laws by Departing 
Aliens

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

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SUMMARY: This document contains final Income Tax Regulations that 
exempt certain alien students, industrial trainees, and exchange 
visitors from the requirement of obtaining a certificate of compliance 
with income tax laws before departing the United States. This action is 
necessary because of changes to the applicable tax laws made by the 
Technical and Miscellaneous Revenue Act of 1988.

EFFECTIVE DATE: This regulation is effective March 3, 1994.
    This regulation applies to departures after April 4, 1994.

FOR FURTHER INFORMATION CONTACT: Thomas L. Ralph (202-622-3880, not a 
toll-free call).

SUPPLEMENTARY INFORMATION:

Background

    On January 28, 1991, the IRS published a notice of proposed 
rulemaking in the Federal Register (56 FR 3061) by cross reference to 
temporary regulations (56 FR 3034) that proposed amendments to the 
Income Tax Regulations under section 6851 of the Internal Revenue Code 
of 1986. These regulations implemented section 1001(d) of the Technical 
and Miscellaneous Revenue Act of 1988, Public Law 100-647, 102 Stat. 
3342. Comments responding to the notice of proposed rulemaking were 
received but no public hearing was requested or held. After 
consideration of the written comments, the IRS adopts the proposed 
regulations as revised by this Treasury decision.

Explanation of Provisions

    The regulations exempt certain alien students, industrial trainees, 
and exchange visitors, and their spouses and children, from the 
requirement of obtaining a certificate of compliance with the U.S. 
income tax laws before they depart the United States. Aliens exempt 
from the requirements are those admitted to the United States solely on 
an F-1, F-2, H-3, H-4, J-1, or J-2 visa, who have received no gross 
income from U.S. sources other than: (1) Allowances to cover expenses 
incident to study in the United States, (2) the value of any services 
or accommodations furnished incident to that study, (3) income derived 
in accordance with the employment authorizations in 8 CFR 274a.12(b) 
and (c) that apply to the alien's visa or (4) interest on deposits 
described in section 871(i)(2)(A). Furthermore, aliens admitted solely 
on an M-1 or M-2 visa who have received no gross income other than that 
derived in accordance with the employment authorization in 8 CFR 
274a.12 (c)(6) or described in section 871(i)(2)(A) are also exempt 
from the requirement.
    Comments received were very positive. Accordingly, the regulations 
adopt the provisions of the notice of proposed rulemaking, with only 
minor changes. In response to a comment, the words ``or training'' are 
added immediately after the word ``study'' in Sec. 1.6851-2(a)(2)(ii) 
(A) (1) and (2) to clarify that the regulations apply to payments 
incident to training as well as study. In addition, a commentator 
suggested that the exemption should apply to amounts, such as travel 
allowances, that may be received by students or trainees when not 
physically present in the United States. These regulations clarify that 
such amounts are covered by the exemption as well, assuming that the 
other requirements of the regulations have been met. The final 
regulations also provide that the exemption covers amounts received 
that are exempt from United States taxation under section 871(i)(2)(A), 
relating to certain interest on deposits.

Special Analyses

    It has been determined that this Treasury decision is not a 
significant regulatory action as defined in EO 12866. Therefore, a 
regulatory assessment is not required. It also has been determined that 
section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) 
and the Regulatory Flexibility Act (5 U.S.C. chapter 6) do not apply to 
these regulations, and, therefore, a Regulatory Flexibility Analysis is 
not required. Pursuant to section 7805(f) of the Internal Revenue Code, 
the notice of proposed rulemaking preceding these regulations was 
submitted to the Small Business Administration for comment on its 
impact on small business.

Drafting Information

    The principal author of these regulations is Thomas L. Ralph of the 
Office of Associate Chief Counsel (International), within the Office of 
Chief Counsel, IRS. Other personnel from the IRS and Treasury 
Department participated in their development.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Adoption of Amendments to the Regulations

    Accordingly, 26 CFR part 1 is amended as follows:

PART 1--INCOME TAXES

    Paragraph 1. The authority for part 1 is amended by removing the 
entry for ``Section 1.6851-2T'' and adding an entry in numerical order 
to read as follows:

    Authority: 26 U.S.C. 7805 * * *

    Section 1.6851-2 also issued under 26 U.S.C. 6851(d). * * *


Sec. 1.6851-2T  [Removed]

    Par. 2. Section 1.6851-2T is removed.
    Par. 3. Section 1.6851-2 is amended by revising paragraph 
(a)(2)(ii) to read as follows:


Sec. 1.6851-2  Certificates of compliance with income tax laws by 
departing aliens.

    (a) * * *
    (2) * * *
    (ii) Alien students, industrial trainees, and exchange visitors. A 
certificate of compliance shall not be required, and examination as to 
United States income tax liability shall not be made, upon the 
departure from the United States or any of its possessions of--
    (A) An alien student, industrial trainee, or exchange visitor, and 
any spouse and children of that alien, admitted solely on an F-1, F-2, 
H-3, H-4, J-1 or J-2 visa, who has received no gross income from 
sources inside the United States other than--
    (1) Allowances to cover expenses incident to study or training in 
the United States (including expenses for travel, maintenance, and 
tuition);
    (2) The value of any services or accommodations furnished incident 
to such study or training;
    (3) Income derived in accordance with the employment authorizations 
in 8 CFR 274a.12(b) and (c) that apply to the alien's visa; or
    (4) Interest on deposits described in section 871(i)(2)(A); or
    (B) An alien student, and any spouse or children of that alien 
admitted solely on an M-1 or M-2 visa, who has received no gross income 
from sources inside the United States other than income derived in 
accordance with the employment authorization in 8 CFR 274a.12(c)(6) or 
interest on deposits described in section 871(i)(2)(A).
* * * * *
Margaret Milner Richardson,
Commissioner of Internal Revenue.
    Approved: February 9, 1994.
Leslie Samuels,
Assistant Secretary of the Treasury.
[FR Doc. 94-4781 Filed 3-2-94; 8:45 am]
BILLING CODE 4830-01-U