Back to the Future: A Time for Rethinking the Test for Resident Alien Status Under the Income Tax Laws

Abstract

If the sole object of our tax law is certainty, then the quest for a bright-line, mechanical test would appear to be justified. Fairness, however, is an equally important objective. If fairness is sacrificed in our rush to formulate a bright-line test, then the law is not fully successful. The trade-off between certainty and fairness attains particular significance for non-United States citizens earning income in this country. Under United States tax laws, these individuals may be taxed as either resident aliens or nonresident aliens. This classification can be crucial because the resident alien is taxed on his worldwide income; the nonresident alien is only taxed on his United States source income. The judicial test for resident alien status has created a situation of concern because it has moved from a subjective evaluation to an objective formula. With this in mind, this Article will look at the changing federal income tax definition of a resident alien individual.