IRS LISTS COUNTRIES SUBJECT TO EARNED INCOME EXCLUSION RESIDENCY EXCEPTION.

Rev. Proc. 91-29

SECTION 1. PURPOSE

01 This revenue procedure provides information to any individual who fails to meet the foreign residency requirements of section 911(d)(1) of the Internal Revenue Code for eligibility for the exclusion from gross income under section 911(a) of foreign earned income and housing cost amounts because adverse conditions in a foreign country precluded the individual from meeting those requirements.

02 Revenue Procedure 90-55, 1990-49 I.R.B. 9, Revenue Procedure 86-39, 1986-2 C.B. 701, and Revenue Procedure 81-23, 1981-1 C.B. 693 previously listed countries for which the foreign residency requirements of section 911(d)(1) of the Code are waived under section 911(d)(4) because of adverse conditions in those countries during the time periods stated. This revenue procedure relists countries where the adverse conditions are still in effect, adds countries where periods of adverse conditions occurred after the publication of the list in Revenue Procedure 90-55, and removes countries where the adverse conditions ended before the publication of Rev. Proc. 90-55. Rev. Proc. 90-55, Rev. Proc. 86-39, and Rev. Proc. 81-23 remain in full force and effect; the older periods listed therein are omitted from this revenue procedure solely for brevity.

SEC. 2. BACKGROUND

01 Section 911(a) of the Code allows foreign earned income and housing cost amounts to be excluded from the gross income of a "qualified individual" as defined in section 911(d)(1).

02 Section 911(d)(1) of the Code defines the term "qualified individual" as an individual whose tax home is in a foreign country and who is (A) a citizen of the United States and establishes to the satisfaction of the Secretary of the Treasury that the individual has been a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire taxable year, or (B) a citizen or resident of the United States who, during any period of 12 consecutive months, is present in a foreign country or countries during at least 330 full days.

03 Section 911(d)(4) of the Code provides an exception to the residency requirements of section 911(d)(1). An individual who for any period is a bona fide resident of, or is present in, a foreign country, and who leaves that foreign country after August 31, 1978, will be treated as a qualified individual with respect to the period the individual was a bona fide resident of, or was present in, the foreign country if the departure occurred during a period for which the Secretary of the Treasury, after consultation with the Secretary of State, determines that individuals were required to leave the foreign country because of war, civil unrest, or similar adverse conditions in the foreign country that precluded the normal conduct of business by those individuals. An individual must establish that but for those conditions the individual could reasonably have been expected to meet the residency requirements. Further, an individual must have established residency or have been physically present in the foreign country on or prior to the date that the Secretary of Treasury determines that individuals were required to leave the foreign country. Individuals who establish residency or are first physically present in the foreign country after the date that the Secretary prescribes, but during the period for which the Secretary determines that individuals were required to leave the foreign country, shall not be treated as qualified individuals under section 911(d)(4).

04 For purposes of section 911 of the Code, an individual who left one of the following countries during the specified period shall be treated as a qualified individual with respect to the period during which that individual was a bona fide resident of, or present in, that foreign country if the individual establishes a reasonable expectation of meeting the requirements of section 911(d) but for those conditions.

 Country                  On or After               On or before

A taxpayer who needs assistance on how to claim this exclusion, or on how to file an amended return, should contact a local IRS Office or, for a taxpayer residing or traveling outside the United States, the nearest overseas IRS office.

DRAFTING INFORMATION

The principal author of this revenue procedure is Thomas L. Ralph of the Office of Associate Chief Counsel (International). For further information regarding this revenue procedure contact Mr. Ralph on (202) 377-9059 (not a toll-free call).