The history of this interpretation by the IRS goes back to merchant seamen ( yes, I just said seamen ). Merchant seamen were trying to claim the foreign earned income exclusion, but the rule is quite clear in that one must be IN a foreign country or resident of a foreign country. The IRS argued that a merchant seaman is not in a foreign country during the course of their work since they are on the high seas in international waters most of the time and their foreign income was disallowed. So some bright spark in the IRS thinks that the same applies to pilots ( who apparently only work when they are in the airplane flying over international water ).

Nevermind the spirit of the foreign earned income exclusion. That being that one who is not in the USA for more than 330 days or one who is residing overseas is not using tax payer funded services. I.E. police services, fire services, roads, schools, etc, etc, etc.

There is no doubt in my mind that someone who fought it all the way to the top would win, just based on common sense. The cost to do so for an individual is prohibitive though. It would take a class action suit to spread the costs. Maybe we can ask ALPA to help us out



Typhoonpilot