Overview
Many foreign nationals have found themselves unexpectedly unable to depart the United States due to the COVID-19 pandemic. This presents a particular challenge for individuals present in the United States under the Visa Waiver Program (VWP), often referred to as ESTA, a category which precludes standard status extension options. As explained below, in response to COVID-19, the US Customs and Border Protection (CBP) has taken steps to facilitate the ability of VWP travelers to lawfully remain in the US beyond the allowed 90-day period of stay. This client alert discusses this option as well as recent tax policy developments intended to address the US tax consequences facing many VWP travelers.
Visa Waiver Program
The VWP allows foreign nationals from 39 qualifying countries to travel to the United States for business or pleasure visits of up to 90 days without a visa. It is often referred to as ESTA, which is the acronym for the Electronic System for Travel Authorization – the pre-clearance approval required to utilize the VWP travel option. As a result of the COVID-19 health crisis, the United States has temporarily suspended travel from many countries including VWP eligible European countries. Many VWP travelers who entered shortly prior to the travel restrictions now face upcoming expirations of their 90-day permitted VWP stays.
Under ordinary circumstances, VWP travelers are not eligible to change or extend their status – they must depart the United States in a timely fashion. Failure to depart results in ineligibility for future VWP travel and other serious potential immigration consequences. The single exception to these restrictions is a rarely-granted, 30-day, emergency forgiveness known as Satisfactory Departure. As explained below, at this time, CBP has taken steps to facilitate the Satisfactory Departure process and is allowing requests for two 30-day extension periods.
Satisfactory Departure: Second Thirty Day Period Permitted
VWP travelers are not permitted to change or extend their temporary immigration status. The only mechanism to request a longer VWP stay requires an emergency which prevents a timely departure from the United States. In that case, the Department of Homeland Security can grant a 30-day period of Satisfactory Departure. Under normal circumstances, this 30-day period is the limit of the relief that can be granted. However, CBP announced on April 17 that VWP travelers who are granted Satisfactory Departure may subsequently apply for an additional 30-day extension of their admission period if they remain unable to depart the United States because of COVID-19.
CBP is handling Satisfactory Departure requests due to the closure of US Citizenship and Immigration Services (USCIS) field offices which would otherwise adjudicate these cases. Thus, these requests may be made to CBP at Ports of Entry and Deferred Inspection Offices. These offices are typically located at or near international airports throughout the United States. Each CBP location has slight variations and nuances in the manner of processing these requests, such as how far in advance one can apply and the exact mechanism for making the request. Travelers should be prepared to document their inability to depart the United States with documentation including: flight cancellations, home country conditions, travel restrictions, illness, and/or COVID-19 exposure.
Satisfactory Departure: Timing Considerations
Satisfactory Departure requests must be made prior to the expiration of the 90-day period of authorized VWP stay. Thereafter, if the individual departs the United States within the granted period, the departure is considered to have complied with US immigration law.
If it is necessary to request a second 30-day Satisfactory Departure period, such request must be made during the validity of the initial 30-day Satisfactory Departure period. Thereafter, absent any additional accommodations for the COVID-19 pandemic, the individual must depart within the Satisfactory Departure extension period. Timing and managing deadlines are extremely important for those who need to avail themselves of this option.
Tax Residency Timing Concerns
While the VWP extension option is a welcomed use of CBP’s discretionary power, it is strictly an immigration solution. Many foreign nationals strategically use the VWP and limit their time in the United States to avoid tax-residency related consequences. These individuals who are currently present in the United States without options for departure may need to analyze the tax consequences and eligibility for any COVID-19 related exceptions to US income tax residency. See our client alert on IRS guidance on tax presence and residency issues.
For foreign nationals who are not already US permanent residents, US income tax residency is determined by the amount of time an individual spends physically present in the United States. The test is based not only on the number of days in the United States for the current year but also on a fraction of the number of days in the United States in the preceding two years (for more details on the day-count calculation and its impact, see our client alert.) For individuals who exceed the threshold number of days, certain exceptions may apply to exclude days of US presence from the tax residency calculation. For example, a longstanding exception may offer relief if the individual was prevented from leaving the United States due to a medical condition that arose while in the United States. Also, the IRS recently issued guidance providing an exception to exclude days of US presence specifically related to COVID-19 travel disruptions, though this exception may not apply to everyone. In either case, professional assistance is recommended to claim an exception.
Look for Options and Changes
The COVID-19 pandemic's global impact is unprecedented. Its effects do not automatically change compliance rules for immigration, tax, or any other area of law. However, the pandemic has brought about an ever-changing series of accommodations and exceptions, each with their own limits and requirements. The recent CBP and IRS guidance are perfect examples, and the longer we are affected by the COVID-19 pandemic, the more such developments will emerge. In order to assist our clients in remaining apprised of such changes and their implications, Steptoe launched a COVID-19 Resource Center which provides continuous coverage of legal developments related to COVID-19.
