CCA 1325013: A missing section 6013(g) election avoids section 6677 penalties

Plain-English summary

Chief Counsel Advice addresses whether a nonresident alien who filed a joint federal income tax return with a U.S. citizen spouse became subject to section 6677 penalties for failing to file information returns under section 6048. The advice concludes that, without a proper election under section 6013(g), the joint filing did not change the taxpayer's nonresident-alien status for the relevant tax purposes. It therefore concludes that the taxpayer was not subject to the section 6048 reporting requirements or the related section 6677 penalty on the facts described. The advice notes that the result could differ if a proper section 6013(g) election had been made or the taxpayer later became a United States person.

Ruling snapshot

• Question: Does a nonresident alien who filed a joint return without a valid section 6013(g) election become subject to section 6048 reporting requirements and section 6677 penalties?
• Outcome: Advice given
• Key authorities: IRC §§ 6013(g), 6048, and 6677; Treas. Reg. §§ 1.6013-6(a)(1), 1.6013-6(a)(4)(i)-(ii), 16.3-1, and 404.6048-1; Kravetz v. Commissioner, T.C. Memo. 1985-486

Full text (IRS public release)

ID: CCA_2013021415392015
Office: --------
UILC: 6013.00-00
Number: 201325013
Release Date: 6/21/2013
From: --------------------
Sent: Thursday, February 14, 2013 3:40:00 PM
To: --------------------------
Cc: ----------------------------------------------
Subject: RE: Question Concerning the Interaction Between Sections 6013(g) and 6677----------------------

You asked whether a nonresident alien who filed, possibly in error, Forms 1040 income tax returns jointly
with his wife (who is a U.S. citizen) is now subject to the section 6677 penalty for the failure to file
information returns required under section 6048 with respect to certain foreign trusts. If the nonresident
alien did not make a proper election under section 6013(g) to be treated as a resident alien for certain tax
purposes, then the answer is no, he is not subject to the section 6677 penalty for the failure to file
information returns required under section 6048. See the response below from ----------------------------------
-----------------. Please let me know if you have any questions.

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From: -------------------------
Sent: Thursday, February 14, 2013 8:43 AM
To: ----------------------
Cc: ------------------------
Subject: Question Concerning the Interaction Between Sections 6013(g) and 6677--------------------------

You asked for our opinion on whether a nonresident alien who filed a joint income tax return becomes
subject to the section 6048 reporting requirements and section 6677(a) penalties as a result of section
6013(g). We specifically address the situation in which the nonresident alien and his spouse did not
make a proper election under section 6013(g).

Section 6013(g) allows a nonresident alien individual who is married to a citizen or resident of the United
States to elect to be treated as a resident of the United States for purposes of chapter 1 and 24 of the
Internal Revenue Code. Sec. 6013(g)(1) and (2). The regulations require the nonresident alien and his
spouse to make the election by attaching a statement to a joint return for the first taxable year for which
the election is to be in effect. Treas. Reg. §1.6013-6(a)(4)(i). The statement must contain a declaration
that the election is being made and that the requirements of Treas. Reg. §1.6013-6(a)(1) are met for the
taxable year, it must contain the name, address, and TIN of each spouse, and it must be signed by both
persons making the election. Treas. Reg. §1.6013-6(a)(4)(ii). Failure to make such an election renders
section 6013(g) inoperative. See Kravetz v. Commissioner, T.C. Memo. 1985-486.

Because the nonresident alien and his spouse did not make a proper election, section 6013(g) is
inoperative and does not affect the taxpayer’s status as a nonresident alien for purposes of chapters 1
and 24 of the Internal Revenue Code. Although section 6048 is under --------- jurisdiction, it is our
understanding that a nonresident alien is not subject to section 6048 reporting requirements. See Treas.
Reg. §§ 16.3-1, 404.6048-1.

Please note that our answer may potentially be different if a proper section 6013(g) election was made or
if the nonresident alien has since become a United States person. If you would like to discuss further or
have any other questions, please feel free to contact me.

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