Zero Amount Tax Returns
Why File a Zero Amount Tax Return?
A zero amount tax return could mean there is no income to report, because:
- (a) there is no US source income; or
- (b) the US source income is reduced to zero
taxable income due (either in combination or individually) to personal exemption, allowed deductions, or treaty benefits.
When making some of its determinations with regard
to the status of certain aliens, the United States Citizenship and Immigration Service (USCIS) sometimes asks an alien
to prove that he has complied with all his U.S. tax obligations.
This is easy to do in cases in which the alien has filed a U.S.
federal individual income tax return for every year he has been in the
USA, since the Internal Revenue Service (IRS) has assigned a document locator number (DLN) to each
tax return filed. It can easily retrieve the alien's original tax
return if asked to do so.
More frequently, however, the IRS proves that a
taxpayer has filed a return by accessing the computerized filing record
of the taxpayer, and printing out "transcripts" which list the content
of returns filed. If requested, some of these transcripts actually
depict the line-by-line entries made by the taxpayer on his federal tax
returns. The IRS usually can provide transcripts very quickly. Those
reports normally are sufficient to prove to USCIS that the alien
taxpayer has filed all of his required federal returns.
- A taxpayer may use IRS Form 4506 to request a copy of his original tax return; or he may use Form 4506-T to
request a transcript which proves the filing of a tax return, and lists
all the transactions which have transpired with respect to the return.
You may download these forms from the IRS website at:
A problem can arise for cases in which (a) an
alien had no gross income [and thus had no requirement to file a tax
return under section 6012 of the IRC], and (b) did not file a U.S.
federal tax return for that year. Not filing the return places the
alien in a difficult situation with USCIS, because it is difficult for
the alien to prove to USCIS that he had no gross income in certain tax
years and was not required to file a tax return for those tax years.
The IRS can provide evidence that the alien
did not file any tax returns for certain tax years; but the IRS
cannot prove that the alien had no gross income and cannot prove that he
had no filing requirement.
In light of these facts, it is therefore probably
better in the case of an alien who is intending to remain in
the USA for a long period of time, and who is intending eventually to
change his status to that of a Lawful Permanent Resident or U.S.
citizen, that such alien individual file a U.S. federal
individual income tax return for each and, every year he is present in
the USA, even though in some of those years, he may not have any gross
income to report on the returns.
As a general rule, unless the IRS suspects
fraud, the IRS will process a U.S. federal individual income tax return
which reports no gross income in the same manner it processes all other
tax returns it receives. That is, the IRS will assign a DLN to the
return, will file the return in its numbered archives, and will produce a
computerized record of return filing, which can be accessed later to
prove that the return was filed.
When dealing with the federal bureaucracy, it
is always easier to argue that one has complied with his tax obligations
by pointing to a duly filed tax return whose filing can be verified by
the IRS (even though the return shows no gross income), than it is to
attempt to explain that one did not file tax returns for certain years
because in those years he had no gross income to report.
With respect to aliens who have U.S. source gross
income which is exempt from tax under the provisions of an income tax
treaty: An alien who has U.S. source gross income which would
require the filing of a U.S. federal income tax return under section
6012 of the Code, must still file such an income tax return to report
such gross income, even though the provisions of a tax treaty result in
no taxation or partial taxation of such gross income.
This is true because even though the
provisions of a tax treaty might result in no tax being assessed on the
alien's gross income, it is still true that the alien has such gross
income under section 61 of the Code, and that he is still required to
file a return to report such gross income under section 6012 of the
Code. Thus, all aliens who claim that all or a portion of their
U.S. source gross income is exempt from U.S. taxation under the
provisions of a tax treaty, are still required to report all of such
gross income on a U.S. income tax return, and to clearly identify and
explain the treaty exemption on such U.S. income tax return.
From the foregoing, Notre Dame's Tax Assistance Program (TAP) has based its
policy and practice of preparing zero amount tax returns. It is
up to the tax client to bring his or her need for this service to the
attention of the TAP. You may make your request by sending an email asking for this service.