US tax laws threaten inbound tourism

Posted on by in Point-to-Point

Every year, international visitors to the United States contribute more than $130 billion to the US economy.  In addition, over one million US jobs directly depend on inbound tourism.  However, foreign visitors are now re-thinking their US vacations and business trips.

According to the Internal Revenue Service (Pub. 519), any visitor spending a total of more than 31 days in the United States in the current year may now be required to file with the IRS. The filing is designed to prove that they have no further US tax obligations.  In other words, they have to file with the IRS in order to prove that they don’t have to file!

In Europe, where six-week vacations are the norm, those considering trips to the US are understandably concerned. Canadians have expressed concern as well.

Canadians routinely cross the border for shopping, business meetings, to buy gas or to make international connections through US airports.  Each are counted along with cruise departures, arrivals or stops in U.S. ports.

Curiously, a “day” does not mean twenty-four hours.  Even one minute spent on US soil is considered a day by the IRS. There are some exceptions of course.

IRS filing obligations for visitors are based on a complex formula: 100% of days in the current year, plus 1/3 of days in the prior year, plus 1/6 of days in the year before that. 

Filing obligations kick-in at 183 days; however, staying more than 31 days triggers the test (IRS form 8840).

Keeping precise records of every day (or minute) spent in the US is now critical for foreign visitors.  I live in Vancouver and I know that many of my fellow Vancouverites have simply decided that it’s no longer worth the trouble.

Nolan Burris is an author, former travel agent, failed musician and self-professed techno-geek. He’s also a popular international speaker both inside and outside of the travel industry.  He is the founder and chief Visioneer of Future Proof Travel Solutions (futureprooftravel.com) based in Vancouver, Canada.  Nolan’s believes that if can change the way business works, you’ll change the world. His goal is to spread the message of integrity and ethics in a techno-driven world.

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