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 Rev. Rul. 76-82

1976-1 C.B. 192

Section 871

IRS Headnote

Commuter aliens. Citizen-residents of Canada or Mexico who commute to work in the U.S. on a daily or seasonal basis, although treated as immigrants lawfully admitted to the U.S. for permanent residence under immigration statutes, are considered nonresident aliens for Federal income tax purposes.

Full Text

Rev. Rul. 76-82

Advice has been requested whether, under the circumstances described below, commuter aliens, who are treated as immigrants lawfully admitted to the United States for permanent residence under immigration statutes, are considered resident or nonresident aliens for Federal income tax purposes in light of the recent decision in Saxbe v. Bustos, 419 U.S. 65 (1974).

A, a citizen and resident of Canada, commutes to work in the United States on a daily basis. B, a citizen and resident of Mexico, commutes to work in the United States on a seasonal basis, the season having an annual duration of 4 months. As a result of B's seasonal employment, B is present in the United States for a period of 4 months. The Immigration and Naturalization Service classifies aliens such as A and B as "special" immigrants "lawfully admitted for permanent residence" who are "returning from a temporary visit abroad" as defined in the Immigration and Nationality Act, 8 U.S.C., section 1101(a)(27)(B). Aliens classified as special immigrants under this Act may be permitted entry into the United States without the usual documentation and quota requirements, and without the labor certification requirements of 8 U.S.C., section 1182(a)(14).

The Supreme Court of the United States in Saxbe v. Bustos affirmed the administrative practice of the Immigration and Naturalization Service of classifying commuter aliens as special immigrants within the meaning of the Immigration and Nationality Act. The Court also held that this classification is applicable to both daily and seasonal commuters.

Section 1.871-2(a) of the Income Tax Regulations provides, in part, that the term "nonresident alien individual" means an individual whose residence is not within the United States, and who is not a citizen of the United States.

Section 1.871-2(b) of the regulations provides, in part, that an alien actually present in the United States who is not a mere transient or sojourner is a resident of the United States for Federal income tax purposes. Whether the alien is a transient is determined by the alien's intentions with regard to the length and nature of the alien's stay. A mere floating intention, indefinite as to time, to return to another country is not sufficient to constitute an alien a transient. If the alien lives in the United States and has no definite intention as to the length of the stay, the alien is a resident.

In making the determination with regard to the alien's intentions, such factors as the purpose and the character of the alien's visit and the kind of visa the alien used to enter the United States are considered. For example, aliens who are admitted into the United States with visas permitting permanent residence are normally considered resident aliens for Federal income tax purposes.

However, the alien's intentions may not coincide with the characterization given the alien's stay by the visa. Consequently, notwithstanding the fact that an alien was admitted for permanent residence, if the alien's stay in the United States resembles that of a nonresident alien, the alien is a nonresident alien for Federal income tax purposes. Conversely, notwithstanding the fact that an alien was admitted on a temporary visa, if the alien's stay in the United States resembles that of a resident alien, the alien is a resident alien for Federal income tax purposes. See Rev. Rul. 72-297, 1972-1 C.B. 212, and Rev. Rul. 72-140, 1972-1 C.B. 211.

Inasmuch as A commutes daily to work, A's presence in the United States is limited to crossing the border to work each day and returning to A's actual dwelling place in Canada when A's work is completed. B commutes to work in the United States on a seasonal basis. The season has an annual duration of 4 months. B is continuously present in the United States during the season in which B is working. When B's work is completed, B returns to Mexico and is completely absent from the United States for the remaining portions of the year.

Because A and B come to the United States merely to work, their actions do not evidence an intention to abandon their residences in Canada and Mexico and to take up new residences in the United States.

Accordingly, A and B are considered nonresident aliens for Federal income tax purposes.

The Saxbe v. Bustos decision is an immigration decision and, as such, did not consider the tax status of commuter aliens. Classifying commuter aliens as immigrants for immigration purposes does not establish their status for Federal income tax purposes.