Charitable Giving, Foreign Nationals, EB5 and IC-DISC

Financial Planning

Charitable Giving, Foreign Nationals, EB5 and IC-DISC

To begin, a foreign national is simply is a person or organization who is not a citizen of the United States, and who is a citizen of a foreign country. Pretty straight forward it would seem. But it can get complicated quickly. The Immigration and Nationality Act (INA) uses the term “alien” to refer to a person who is not a United States citizen, and does not use the term “foreign national.” Maybe a better way to state it is that a foreign national is a term used to describe a person who is not a citizen of the host country in which he or she is temporally residing. It is an individual who is a citizen of any country other than the US. Whether a foreign national is a nonresident or resident alien for tax purposes is determined based on the individual’s visa status, purpose of the current visit, and length of stay in the US. So it would seem that the form of visa the person holds determines whether or not that person is regarded as alien or foreign national. The main distinction seems to be tax status.

EB2 and EB5

Since the term “foreign national” is largely based on the type of visa let us look to that next. There are several categories of visas but we will focus on the EB2 and the EB5. An E2 Investor Visa is a non-immigrant visa that allows foreign investors to enter and work in the United States for a business they have invested in. To qualify for an E2 visa, the investor must be a citizen of a country that has a treaty of commerce and navigation with the United States. The E2 Investor Visa allows foreign investors to:

  • Live and work in the United States for the extent of the visa
  • Bring their spouse and children under 21 years old to reside in the United States
  • Travel in and out of the United States as needed
  • Renew the visa indefinitely, as long as the business remains viable

An EB5 V isa is a unique program that provides foreign investors and their families with the opportunity to obtain permanent residency in the United States by investing in job- creating businesses. It is a complex and rigorous process often facilitated by professionals such as attorneys. Otherwise it can get bogged down in the red tape of proper procedure. Here is an excerpt from the U.S. Citizenship and Immigration Services website.

“USCIS administers the EB-5 Immigrant Investor Program, which was created by Congress in 1990 to stimulate the U.S. economy through job creation and capital investment by foreign investors. Under a program first enacted as a pilot in 1992 and regularly reauthorized since then, investors may also qualify for EB-5 classification by investing through regional centers designated by USCIS based on proposals for promoting economic growth. On March 15, 2022, President Biden signed the EB-5 Reform and Integrity Act as part of the Consolidated Appropriations Act, 2022 (Public Law 117-103), which created new requirements for the EB-5 immigrant visa category and the Regional Center Program. Immigrant visas are authorized under the Regional Center Program through Sept. 30, 2027.”


We have now taken a brief look at the term “foreign national” and the EB2 and EB5 Visas now lets move on to IC-DISC. This is another government program to help companies that export goods. An interest-charge domestic international sales corporation (“IC-DISC”) provides federal tax benefits to U.S. companies who either directly or indirectly sell goods to foreign buyers. Decades ago, Congress enacted this tax vehicle for the sole purpose of providing tax benefits to U.S. taxpayers that sell their products overseas. The IC-DISC was originally created to facilitate foreign sales by providing a tax deferral mechanism. Even after the more recent major provisional changes under the Tax Cuts and Jobs Act, the IC-DISC still provides a permanent tax savings to U.S. taxpayers. If a foreign national has the appropriate visas and his business is actually domiciled in the U.S. they may qualify for IC-DISC tax benefits. There are a lot of “ifs” though. It is strongly suggested to find the right professionals to help in this regard.


So what is the point to all this? Under these programs a foreign national can qualify to purchase life insurance from U.S. based carriers. The interesting point is that this market been described as “exploding.” Many people that are considered “EB5s” are very interested in being able to purchase American life insurance. As we have seen life insurance can be a very powerful tool in charitable planning. Some can use a portion of the policy death benefit or the cash value to get the Gospel to their own country and their own people.

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