This report covers new countries for which the eligibility requirements of U.S. Internal Revenue Code section 911(d)(1) are waived.
To subscribe to GMS Flash Alert, fill out the subscription form.
On March 28, 2019, the U.S. Internal Revenue Service (IRS) released an advance copy of Revenue Procedure 2019-15,1 which concerns individuals who failed to meet the eligibility requirements of either the bona fide residence test or the physical presence test under U.S. Internal Revenue Code section 911(d)(1) – and thus may not exclude foreign earned income and housing cost amounts from gross income – because war, civil unrest, or similar adverse conditions in a foreign country precluded the individuals from satisfying these requirements.2
The Rev. Proc. released on March 28 lists four countries for which the eligibility requirements of section 911(d)(1) are waived for tax year 2018: Democratic Republic of the Congo, Cuba, Iraq, and Nicaragua.
Individuals who would otherwise qualify for the foreign earned income and foreign housing cost exclusions, may lose the benefit of those exclusions if they leave a country prior to fulfilling the time requirements, which could affect the amount of tax they owe.
A special exception to the time requirements to qualify for those exclusions is allowed for persons who are forced to leave a country designated by the IRS due to war, civil unrest, or other adverse conditions.
Rev. Proc. 2019-15 provides that the Treasury Department, in consultation with the Department of State, has determined that for tax year 2018, war, civil unrest, or similar adverse conditions precluded the normal conduct of business in four countries. An individual who left one of those countries on or after a specified date will be treated as a
“qualified individual” for purposes of section 911 with respect to the period during which that person was present in, or was a bona fide resident of, the country, provided that the individual establishes a reasonable expectation of meeting the requirements of section 911(d)(1) but for the adverse conditions. An individual who was first present, or established residency, in the country after the specified date, is not eligible to qualify for the exception.
The countries and effective dates listed in Rev. Proc. 2019-15 are:
|Country||Date of Departure On or After|
|Congo (Democratic Republic of the)||December 14, 2018|
|Cuba||January 4, 2018|
|Iraq||September 28, 2018|
|Nicaragua||September 28, 2018|
1 See the advanced copy of Rev.Proc. 2019-15 (PDF 20 KB) . Revenue Procedure 2019-15 will be published in Internal Revenue Bulletin 2019-14, dated April 1, 2019.
2 For coverage of Rev. Proc.2018-23 designating Turkey as a country for which the eligibility requirements of section 911(d)(1) is waived for tax year 2016, see GMS Flash Alert 2018-063, April 11, 2018.
The above information is not intended to be "written advice concerning one or more Federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230 as the content of this document is issued for general informational purposes only.
The information contained in this newsletter was submitted by the KPMG International member firm in the United States.
© 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.KPMG International Cooperative (“KPMG International”) is a Swiss entity.
Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.
Flash Alert is an Global Mobility Services publication of KPMG LLPs Washington National Tax practice. The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.