Rev. Proc. 81-23

The purpose of this revenue procedure is to provide taxpayers and revenue agents with information concerning Pub. L. 96-608, 1980-2 C.B. 728. Pub. L. 96-608 deals, in part, with the waiver of the residency requirements for individuals living abroad with respect to deductions under section 913 of the Internal Revenue Code and certain exclusions from gross income under section 911.

Sec. 2. Background

Section 913(a) of the Code allows a deduction for certain expenses of living abroad to a citizen of the United States who has been a bona fide resident of a foreign country or countries for an entire taxable year or to a citizen or resident of the United States who, during any period of 18 consecutive months, is present in a foreign country or countries during at least 510 full days in such period.

Section 911(a) of the Code provides for the exclusion of certain items from the gross income of an individual described in section 913(a) who, because of employment, resides in a camp located in a hardship area or performs qualified charitable services in a lesser developed country.

Pub. L. 96-608, enacted by Congress on December 28, 1980, amends section 913 of the Code to provide that, for purposes of that section's residency requirements, an individual who for any period is a bona fide resident of or present in a foreign country, leaves that foreign country after August 31, 1978, during a period for which the Secretary, after consultation with the Secretary of State, determines that individuals were required to leave the foreign country because of war, civil unrest, or similar adverse conditions in that foreign country which precluded the normal conduct of business by such individuals, and establishes that it would be reasonable to expect that the residency requirements could have been met but for the war, civil unrest, or similar adverse conditions, shall be treated as having met such requirements with respect to the period such individual was a bona fide resident or was present in the foreign country. Pub. L. 96-608 also provides that similar rules shall apply for purposes of applying section 911.

The following is a list of countries and time periods that, as of March 20, 1981, the date released by the Service,/1/ qualify for the waiver of the residency requirements.

 Country                On or After          On or Before

The rules set forth in Pub. L. 96-608 are effective, with respect to section 913 of the Code, for taxable years beginning after December 31, 1977. With respect to section 911, the rules are effective for taxable years beginning in 1977 or 1978.

Taxpayers who believe that additional countries or time periods should be added to this list may petition the Assistant Secretary (Tax Policy), Department of the Treasury, 1500 Pennsylvania Avenue, N.W., Washington, D.C. 20220.

Sec. 4. Inquiries

If a taxpayer needs assistance on how to claim this deduction or exclusion, or on how to file an amended return, if applicable, the taxpayer should contact his or her local IRS Office or, for a taxpayer residing or traveling outside the United States, the nearest overseas IRS office.

¹ News Release IR-81-34.