Appeal Dismissed: Aroeste v. U.S.

On May 3, the Justice Department filed a motion in the Ninth Circuit to dismiss its appeal of the U.S. District Court for the Southern District of California’s decision in Aroeste v. U.S.

The district court rejected a longstanding I.R.S. position that green card holders who are tax resident in the U.S. under the green card test and resident in a tax treaty partner jurisdiction under a substantial presence test remain U.S. persons for F.B.A.R. purposes regardless of a dual resident tiebreaker test in a treaty. The district court held that dual residence tiebreaker rules within U.S. income tax treaties apply to F.B.A.R. filing requirements.

By withdrawing its appeal, the government has shielded itself from a potentially adverse ruling by the appellate court, ultimately reducing the precedential value for similarly situated taxpayers.