Feigenbaum Law

Key Amnesty Programs for US Taxpayers Living in Canada Set to Close

Personal Tax Planning
February 7, 2020

We have written in previous blogs about the increased lengths that the IRS and Canadian financial institutions are going to uncover dual US/Canadian citizens living in Canada who have failed to report US income tax. Some Americans living in Canada may have previously taken advantage of amnesty programs offered by the IRS such as the Offshore Voluntary Disclosure Program (OVDP) in order to file old income tax statements and avoid the potential financial penalties they may have faced otherwise. However, the IRS has announced that some of these programs are going to be coming to a close, meaning it might be time for people on the fence to decide if they want to comply with US tax laws.

An Onerous Obligation

The United States is virtually the only country in the world that imposes tax based on citizenship rather than residency. For example, Canadians living and working abroad are not required to file taxes in Canada if they are not living here (subject to some exceptions). American citizens, however, have an obligation to file US tax returns no matter where they live, even if they have never lived in the United States but are citizens nonetheless.

Amnesty Programs

Up until the last decade, many dual citizens of the United States and Canada living in Canada may not have been aware that they have to file taxes in the United States. The IRS has been offering programs such as the OVDP to provide people with a chance to catch up on their taxes, become compliant with Foreign Bank Account Reporting requirements and avoid some of the penalties they would have otherwise faced. The IRS also introduced Streamlined Filing Procedures in 2012 that allows people to more easily catch up on old tax returns, and again, avoid some penalties.

Streamlined Filing Procedures Coming To A Close?

In late 2019 the IRS confirmed longstanding rumours that it was preparing to close down its streamlined filing procedures. IRS Commissioner Charles Rettig told people at a conference in California that “nobody should anticipate that the streamlined filing procedures will last forever.” While no dates or details of alternative programs have been made available, it’s natural for some people who have not taken advantage of these programs to start thinking if now is the time.  At Feigenbaum Law, we have filed an appeal to the US Supreme Court to challenge high-stakes cross-border tax issues.

This is a complex issue, and there may be other options available to people who might owe back taxes in the United States. We will continue to update our readers on how this issue progresses through the courts or through legislation.

At Feigenbaum Law, we have a comprehensive and authoritative knowledge of US and Canadian tax law and help people, including dual or American citizens, navigate their tax obligations and responsibilities. We work with clients in both the United States and Canada. Please call us at (905) 695-1269 or reach us online to see how we can help you today.

Tagged: amnesty programs, personal tax planning, voluntary disclosure program