Individuals claiming the medical condition exception under the IRS's substantial presence test do not need to obtain a signed physician’s statement confirming an inability to leave the United States because of COVID-19.
FAQs released by the IRS May 27 say that an individual may file Form 8843, "Statement for Exempt Individuals and Individuals With a Medical Condition,” without a signed physician's statement to cover a 30-day period of extended stay in the United States in 2020. The exemption from the physician’s statement requirement modifies the procedures under Part V of Form 8843 but changes none of the exception’s eligibility requirements.
The IRS said that instead of the signed physician’s statement, individuals may provide documentary evidence to claim the 30-day medical condition in the form of “(i) evidence of consultations with a healthcare provider (for example, a phone bill or a text message or email from the healthcare provider), (ii) receipts related to healthcare purchases, (iii) evidence of cancelled or changed travel reservations, or (iv) official medical records or written healthcare correspondence that the individual received (for example, automated responses instructing an individual to self-isolate).”
Following requests from practitioners, Treasury and the IRS released guidance April 21, including Rev. Proc. 2020-20, that allows a nonresident individual to also claim a COVID-19 medical condition travel exception for purposes of the substantial presence test under section 7701(b)(3) if pandemic-related measures prevented the individual from leaving the United States during the COVID-19 emergency period. An individual may claim other exceptions, including the medical condition exception, under the standard substantial presence test.
The FAQs provide clarification regarding documentary evidence for eligible individuals claiming relief under Rev. Proc. 2020-20. The IRS said that an individual may provide it with Customs and Border Protection Form I-94 (indicating arrival in the United States), travel receipts, or reservations that may include evidence of any changes or cancellations.
According to the FAQs, if the individual has been sick or self-quarantined and would like to claim relief under Rev. Proc. 2020-20, he may provide the IRS with the documentary evidence required for the 30-day medical condition. The IRS confirmed that eligibility under Rev. Proc. 2020-20 will not be affected if the individual cannot provide documentation proving an actual illness. An eligible individual who has applied to become a lawful permanent resident of the United States, but who is not yet a permanent resident, should provide the IRS with a facts and circumstances analysis of intent to leave the United States.
In response to the April guidance, the Florida Bar Tax Section said in a May 14 letter that the IRS and Treasury should clarify both what types of documents are required for proving physical presence in the United States during the COVID-19 emergency period and the long-standing uncertainties regarding the medical condition exception under the substantial presence test.
Jennifer J. Wioncek of Bilzin Sumberg Baena Price & Axelrod LLP, a principal coauthor of the tax section’s letter, told Tax Notes May 28 that she is satisfied with the IRS’s clarification. “In addition to the [Form] I-94, they included other examples, which should be reasonable for taxpayers to provide under the circumstances,” she said. Wioncek also said that she hopes for more detailed guidance — released in a format other than FAQs — regarding historical ambiguities surrounding the medical condition exception.
Michael Karlin of Karlin & Peebles LLP, in a May 14 letter to Treasury and the IRS, requested that the IRS approve the use of the information on Form I-94 for the documentation requirement under the medical condition travel exception.
Karlin told Tax Notes May 28 that the FAQs are a step in the right direction and the government is listening and trying to address tax residency issues stemming from COVID-19. He added that while the FAQs offer reasonable guidance on recordkeeping, the IRS “could have specifically mentioned other possible records where people did not stay in hotels, such as statements from family members or friends with whom the alien stayed, temporary rental agreements, and credit card and other payment receipts indicating expenditures made within in the United States.”