IRS has issued FAQs for nonresident aliens who wish to avail themselves of the Medical Condition Exception or the Medical Condition Travel Exception to the substantial presence test, i.e., the test under which nonresident aliens are taxed as U.S. residents.
Background—the Medical Condition Exception to the substantial presence test.
Unless an exception applies, alien individuals who are not lawful permanent residents (i.e., green-card holders), and who meet the substantial presence test for a given calendar year by virtue of having spent enough time in the U.S. (days of presence), are generally treated as U.S. residents for that year. (Code Sec. 7701(b)(1)(A)(ii))
When applying the substantial presence test, an alien individual may exclude certain days of physical presence in the U.S., including if the individual qualifies for the Medical Condition Exception. The MCE provides that an alien individual is not treated as present in the U.S. on days when the individual is unable to leave the U.S. because of a medical condition that arose while the individual was present in the U.S. (Reg. §301.7701(b)-3(c)(1))
Alien individuals who are eligible to claim the Medical Condition Exception generally must file Form 8843, Statement for Exempt Individuals and Individuals With a Medical Condition, to obtain this exception, which requires a signed statement from a physician or other medical official that the alien individual was unable to leave the United States due to a medical condition or medical problem. (Reg. §301.7701(b)-3(c))
Background—the Medical Condition Travel Exception to the substantial presence test.
Rev Proc 2020-20, 2020-20 IRB, provides relief for certain nonresident alien individuals stranded in the United States due to the COVID-19 Emergency; it describes procedures for Eligible Individuals to claim the COVID-19 Medical Condition Travel Exception, pursuant to which an Eligible Individual can exclude a single period of up to 60 consecutive calendar days of presence in the United States for purposes of applying the substantial presence test. See COVID-19 medical condition travel exception to substantial presence test.
FAQs on the Medical Condition Exception and the Medical Conditional Travel Exception.
Q1. Will an alien individual who intended to but is or was unable to leave the United States on the individual’s planned departure date due to a medical condition or medical problem in calendar year 2020 be required to obtain a physician’s statement as required by Part V of Form 8843?
A1. Any alien individual who is eligible and fulfills the requirements to claim the Medical Condition Exception may file the Form 8843 without a physician’s statement to cover a single period of up to 30 consecutive calendar days in calendar year 2020 (30-Day Medical Condition). This FAQ does not modify the eligibility requirements to claim the Medical Condition Exception, only the procedures for claiming the exception on Part V of Form 8843 and only with respect to a single period of up to 30 consecutive calendar days of presence in the United States in calendar year 2020.
The exemption from the Form 8843 requirement to obtain a physician’s statement for a 30-Day Medical Condition can be claimed in addition to the relief provided in Rev Proc 2020-20. The instructions to Form 8843 for 2020 will reflect the 30-Day Medical Condition contemplated by this FAQ.
Q2. What types of documentary evidence should alien individuals retain to support their eligibility for the 30-Day Medical Condition?
A2. In lieu of a physician’s statement, alien individuals claiming the 30-Day Medical Condition should retain documentary evidence that substantiates their medical condition, their inability to leave due to the medical condition, and the period of the medical condition, such as (i) evidence of consultations with a heath care provider (e.g., a phone bill or a text message or email from the health care provider), (ii) receipts related to healthcare purchases, (iii) evidence of canceled or changed travel reservations, or (iv) official medical records or written healthcare correspondence that the individual received (e.g., automated responses instructing an individual to self-isolate).
These documents should not be submitted with the Form 8843, but alien individuals claiming the 30-Day Medical Condition should be prepared to produce these records if requested by IRS.
Q3. How should alien individuals who only claim the 30-Day Medical Condition complete Part V of Form 8843 (the section of the form applicable to individuals claiming the Medical Condition Exception)?
A3. For those claiming a 30-Day Medical Condition without claiming relief under Rev Proc 2020-20 or any other excluded days pursuant to the Medical Condition Exception, the alien individual should write “30-Day Medical Condition” and then describe in detail the 30-Day Medical Condition that prevented the alien individual from leaving the US under Line 17a in Part V of Form 8843. When determining the information to include in line 17a, an alien individual should provide relevant information so that the individual can clearly demonstrate qualification for the Medical Condition Exception if the Form 8843 is later reviewed by IRS with the corresponding documentary evidence discussed in FAQ 2, as applicable. Lines 17b and 17c should be completed consistently with the form’s instructions. Line 18 of the form should be left blank.
As described in FAQ 2, third-party documentary evidence of an alien individual’s medical condition should not be submitted with the form but should be retained by the alien individual.
Q4. How should alien individuals who claim multiple Medical Condition Exceptions complete Part V of Form 8843?
A4. An alien individual may be able to claim multiple Medical Condition Exceptions and should file a single Form 8843 enumerating all the applicable Medical Condition Exceptions on line 17a. The alien individual should attach a separate statement with respect to each Medical Condition Exception being claimed along with the relevant corresponding information as outlined in Rev Proc 2020-20, in FAQ 3, or the existing instructions, as applicable. As an example, line 17a could read: “Condition 1: COVID-19 MEDICAL CONDITION TRAVEL EXCEPTION; Condition 2: 30-DAY MEDICAL CONDITION,”
Lines 17b and 17c of Part V should be left blank, but the relevant information for each applicable exception, as described in Rev Proc 2020-20 and in FAQ 3, along with the dates that would otherwise be reflected under line 17b and line 17c, would be included in each separate statement. Neither of these conditions require a physician’s statement, and thus line 18 should be left blank.
Note, however, if an alien individual is also claiming a Medical Condition Exception that requires a physician’s statement, the signature and relevant information from line 18 should be included in the separate attachment related to that medical condition.
Q5. What types of documentary evidence should Eligible Individuals retain to support their eligibility for the relief provided under Rev Proc 2020-20?
A5. An Eligible Individual claiming relief under Rev Proc 2020-20 should retain evidence of the individual’s presence in the United States during the individual’s claimed COVID-19 Emergency Period (such as a Customs and Border Protection Form I-94 showing the individual’s entries into the United States, hotel receipts, or travel reservations, including confirmation of changes or cancellations). If the Eligible Individual was actually ill or advised to self-quarantine in the United States during the individual’s excluded days under the revenue procedure, he or she may also retain the documents described in FAQ 2 to demonstrate presence in the U.S. through U.S.-based medical records and treatments, though failure to document an actual illness will not affect eligibility to claim relief under Rev Proc 2020-20.
An Eligible Individual who does not qualify for the presumption of an intent to leave the United States outlined in section Rev Proc 2020-20, Sec. 4.02 (meaning, the individual has applied, or otherwise taken steps, to become a lawful permanent resident of the United States but is not yet a lawful permanent resident), should also retain any documents that may support a “facts and circumstances” analysis of the Eligible Individual’s intent to leave the U.S. under Reg § 301.7701(b)-3(c)(2). These documents should not be submitted with the Form 8843, but Eligible Individuals claiming relief under Rev Proc 2020-20 should be prepared to produce these records if requested by IRS.
Subscribe to our Checkpoint Daily Newsstand email to get all the latest tax, accounting, and audit news delivered to your inbox each weekday. It’s free!