Canada Welcomes IRS Tax Return Help

By Editorial 02 July, 2012

Canadian Finance Minister Jim Flaherty has welcomed the US government's decision to help dual citizens residing in Canada deal with their US tax filing obligations. The Internal Revenue Service (IRS) will also offer assistance to those with Canadian retirement plans.

Taking a new approach, the IRS will provide simplified procedures to dual citizens. It will allow taxpayers posing low compliance risk to become compliant with their US tax and FBAR (Foreign Bank and Financial Accounts) filing requirements without facing penalties or additional enforcement action.

The IRS is also due to streamline processes for US citizens and dual citizens who have contributed to Registered Retirement Savings Plans or Registered Retirement Income Funds in Canada. It will allow them to take advantage, if they have not already done so, of the provision in the Canada-US Tax Treaty which permits deferral of taxation in the US of income in those accounts.

Flaherty was pleased with the decision. He commented: “We told the US government that the vast majority of Canadians targeted were honest, hard-working and law-abiding individuals and they listened. The only transgression of these dual citizens has been failing to file IRS paperwork that they were unaware they were required to file. I am happy the US government has listened to our concerns.”

“These are positive developments. It is yet another accomplishment for Canadians and a testament to our strong working relationship with our American neighbours. I appreciate the cooperative approach of the American authorities. Nevertheless, we will continue to advocate on behalf of Canadians on such issues with the US government, including the implementation of FATCA (Foreign Account Tax Compliance Act),” Flaherty concluded.

Tags: Individuals | Expatriates | Compliance | Tax | Tax Compliance | Law | Retirement | Internal Revenue Service (IRS) | Enforcement | Canada | United States | Penalties |


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