In Uncategorized on 07/20/2012 at 17:32

Not Quite

Here’s a T.C. full-dress treatment leading off 139 T.C., Leah M. Carlebach and Uriel Fried, 139 T.C. 1, filed 7/19/12. See also Daniel Stern and Reizel Stern, T.C. Memo. 2012-204, filed 7/19/12, which follows Carlebach.

Leah was a U. S. citizen, Uriel wasn’t; Dan was a U. S. citizen, Reizel wasn’t. They did, however, obey the Biblical injunction to “be fruitful, and multiply, and fill the earth”. The two couples also had in common that each claimed that their numerous kids were “derivative” U. S. citizens via their respective parent’s citizenship.

That triggers child, additional child, and child care credits, and dependents’ exemptions.

Except it doesn’t, because in the years at issue the said offspring weren’t certified. There are only two ways to be a U.S. citizen: be born here (14th Amendment to Constitution), or be naturalized.

Now a 2000 Federal statute made it possible for children of one U. S. parent to be certified as a U. S. citizen, and that’s a “derivative” citizenship, but to get the brass ring, you have to ride the carousel of 8 USC§1433. And that’s what IRS put into Regulation 1.152-(2)(a)(1).

Leah claims the regulation is invalid, and that as long as the child is at some time a U.S. citizen, she gets the credits and exemptions. But Judge Halpern makes short work of that. Tax years are twelve-month periods. So far as possible one’s tax status must be settled in the particular tax year.

The kids weren’t certified until after the years at issue. So no exemptions or credits.

But Leah does get the penalties. And so does Dan.

  1. says “Most children born abroad to a U.S. citizen parent or parents acquire U.S. citizenship at birth.” The “at birth” contradicts the basis of the tax court conclusion regarding “derivative” U. S. citizens


    • Mr Gray, they may “acquire” US citizenship, but, never having resided in the US, in order to obtain the tax benefits they must be certified as US citzens. See 8USC§1431(a):”A child born outside of the United States automatically becomes a citizen of the United States when all of the following conditions have been fulfilled:
      (1) At least one parent of the child is a citizen of the United States, whether by birth or naturalization.
      (2) The child is under the age of eighteen years.
      (3) The child is residing in the United States in the legal and physical custody of the citizen parent pursuant to a lawful admission for permanent residence.”

      In the Carlebach case, the children never resided in the United States. So they needed o be compliant with 8USC§1433, which provides for certification for those children not compliant with 8USC§1433.

      Of course the Department of State’s oversimplified comments on its website cannot be taken as authority for anything.


  2. Sorry, typos in last sentence of my response. Should read “So they needed to be compliant with 8USC§1433, which provides for certification for those children not compliant with 8USC§1431(a).”


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