Freedom is not free, and neither is US residency. That’s the lesson for Clifford A. Abrahamsen and Sole K. Abrahamsen, in 142 T. C. 22, filed 6/9/14, as taught by Judge Lauber.

It’s Sole’s sole responsibility, as she is a Finnish citizen who came to the USA to work for the Finnish UN Mission. She left the UN Mission to work for the New York branch of a Finnish bank, then went back to the Finnish UN Mission. When first with the Mission and for a time at the bank, she held nonimmigrant US visas. But while at the bank, she decided to apply for permanent US residence.

“As a condition of obtaining that status, she executed U.S. Citizenship and Immigration Services (USCIS) Form I-508, Waiver of Rights, Privileges, Exemptions and Immunities. By signing Form I-508, Ms. Abrahamsen acknowledged that she was then employed in an occupation under which she had nonimmigrant status and declared that she desired ‘to acquire and/or retain the status of an alien lawfully admitted for permanent residence.’ She affirmed by signing this form that she agreed to ‘waive all rights, privileges, exemptions and immunities which would otherwise accrue to [her] under any law or executive order by reason of [her] occupational status.’ 142 T. C. 22, at p. 4.

You can guess the rest. The UN never listed Sole as a diplomat, and neither did the US Mission to the UN. Not deterred, Sole never bothered to report her income from the Mission for six years, claiming Section 893.

But Section 893 only applies to noncitizens of the USA. And in any case, the benefits of Section 893 are waivable, and IRS produces the waiver Sole signed.

For more about Section 893, see my blogpost “IRS Justified”, 3/19/12.

Sole’s lawyers try the “I didn’t know” tactic, which is the usual dead loser. “Petitioners claim that English is Ms. Abrahamsen’s second language; that she signed the waiver more than 20 years ago; that Form I-508 was difficult to understand; and that she did not appreciate the long-term effects of signing the waiver. We expect that many foreign nationals seeking permanent resident status in the United States could advance similar arguments. If such arguments were sufficient to nullify the Forms I-508 they signed, the carefully constructed waiver procedure set forth in the regulations would become the exception rather than the rule.

“More importantly, petitioners cite no statute or judicial precedent to support their assertion that we can ignore a validly executed waiver.” 142 T. C. 22, at pp. 8-9.

The US-Finland tax treaty doesn’t help, because it expressly exempts from its scope residents of the US.

And the Vienna Convention on Diplomatic Relations doesn’t help, because Sole was never listed as a diplomat either by the UN or the US Mission. Nor does the International Organizations Immunity Act, again because Sole never had diplomatic status. And earning income in the US is not a diplomatic function.

Now this opinion is the result of cross-motions for summary judgment. The good-faith exemption from penalties is a fact question: what did Sole tell her preparers, if any, and what were the qualifications; or what did she do herself, to ascertain her correct liabilities?

So that has to be tried.