IRS provides COVID-19 relief to nonresident aliens in U.S.

Apr 22, 2020
Apr 22, 2020
0 min. read

On April 21, 2020, the IRS released an advanced copy of Rev. Proc. 2020-20. The Revenue Procedure will provide certain eligible individuals with an exception to U.S. resident status under the substantial presence test (SPT) in light of travel disruptions imposed by COVID-19. The guidance also provides relief for individuals claiming benefits under a U.S. income tax treaty with respect to income from dependent personal services performed in the U.S. 

Substantial presence test

Under the SPT, an alien is generally considered a U.S. resident if he or she is physically present in the U.S. for at least 31 days in the current year and if the total number of days of presence over the current and preceding two years equals or exceeds 183 days, considering all the U.S. days of the current year, one-third of the U.S. days in the prior calendar year, and one-sixth of the U.S. days in the second preceding calendar year.  

Medical Condition Exception

An eligible individual may exclude days from its U.S. day count for purposes of the SPT under the Medical Condition Exception. Under this exception, an eligible individual may exclude from its U.S. day count, days in which that individual intended to leave the U.S., but was inhibited from doing so as a result of a medical condition that arose while the individual was physically present in the U.S. 

COVID-19 Medical Condition Travel Exception

Rev. Proc. 2020-20 expands the relief provided under the Medical Condition Exception to include the “COVID-19 Medical Condition Travel Exception”. Under this new exception, eligible individuals may exclude up to 60 consecutive calendar days (starting on or after Feb. 1, 2020 and on or before April 1, 2020) during which the individual was physically present in the U.S. on each day for purposes of applying SPT (“COVID-19 Emergency Period”). Notably, an individual need not have contracted the COVID-19 virus in order to benefit under this relief measure. As per the release, an eligible individual will be presumed to have intended to leave the U.S. on any day during the individual’s COVID-19 Emergency Period. In the event that an individual has a medical condition (including contracting the COVID-19 virus), he or she may be eligible to claim the Medical Condition Exception to exclude days occurring outside of the individual’s COVID-19 Emergency Period as long as the individual satisfies the requirements to do so.

Eligible individuals

The relief does not apply to U.S. citizens, any individual holding a green card during calendar year 2020, or any individual who would become a U.S. resident in 2020 due to U.S. presence outside the COVID-19 Emergency Period. An individual would not qualify for this relief if he or she applied, or otherwise took steps, to become a lawful permanent resident (green card holder) of the U.S. in 2020. An individual who was a U.S. resident at the close of the 2019 tax year would also be ineligible for this relief. Moreover, an individual who was not present in the U.S. on each day of their COVID-19 Emergency Period would not qualify.

Treaty relief

In addition to the relief provided for purposes of the SPT, the Revenue Procedure also applies with respect to an individual's eligibility for treaty benefits under the dependent personal services article of a U.S. income tax treaty.  Under those articles, many U.S. income tax treaties exempt income from employment in the U.S. if, among other requirements, the recipient is present in the U.S. for no more than 183 days in any 12 month period that begins or ends in the relevant tax year. For purposes of computing the days of U.S. presence under this test, an individual may exclude any days during the COVID-19 Emergency Period during which the individual was unable to leave the United States due to COVID-19 travel disruptions.

Relief procedures

Eligible individuals required to file a 2020 Form 1040NR, U.S. Nonresident Alien Income Tax Return must attach Form 8843, Statement for Exempt Individuals and Individuals with a Medical Condition (completed as outlined in Rev. Proc. 2020-20) to a timely filed return. Failure to file Form 8843 timely does not fully foreclose relief but an individual must seek permission to file Form 8843 late through a special process and there is no guarantee the IRS will grant relief to late filers. Although eligible individuals who are not required to file a U.S. tax return have no obligation to file the Form 8843, these individuals should be advised to retain any pertinent documentation supporting their reliance on this revenue procedure and be ready to produce these records and complete a Form 8843 if so requested by the IRS. 

 An eligible individual can claim exemption from withholding under a treaty on income from dependent personal services in accordance with this revenue procedure by providing their employer or other withholding agent with a Form 8233, Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual reflecting that the individual is claiming the COVID-19 Medical Condition Travel Exception and the individual’s COVID-19 Emergency Period (completed as outlined in Rev. Proc. 2020-20). Should the withholding agent already consider the income as exempt as a result of a previously submitted Form 8233, then the submission of a new form is not required.

The IRS has also released an FAQ document providing relief to foreign corporations and businesses from creating a permanent establishment or having a U.S. trade or business as a result of the activities of their employees in the U.S. for up to 60 consecutive U.S. days providing that such activities are due to COVID-19 restrictions and would not have been performed in the U.S. otherwise.


While this Revenue Procedure provides relief at the federal level, individuals may still have U.S. state and local income tax filing obligations. Nonresident alien individuals who are generally considered U.S. tax residents for 2020 notwithstanding the relief contained in Rev. Proc. 2020-20, may still be able to avoid U.S. tax residency under the closer connection exception or the tie-breaker rules of a U.S. income tax treaty. If either of these exceptions apply, additional filings will likely be required. Non-U.S. individuals with travel plans that have been affected by COVID-19 should take note of this revenue procedure and consult with their tax advisors to determine the U.S. tax filing options available to them. The Revenue Procedure will be effective upon publication in the May 11, 2020 Internal Revenue Bulletin. 

RSM contributors

  • Dominique Wadhwa
    Senior Director

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