CRA spills the beans to the IRS!!!

Did you know that the Canada Revenu Agency is sharing information with the IRS? As part of the U.S. Treasury Department’s FATCA regulation, the government of Canada agreed to allow the sharing of bank account data with the IRS.

U.S. persons who have accounts at some Canadian financial institutions are likely to have their information shared with the IRS.

This raises a few questions:

What is a U.S. person?

A U.S. person is either a U.S. citizens, a Green Card holders, and/or an accidental Americans.
And, what the heck is an Accidental American? A person born in the nearest U.S. border town hospital. Or someone who was born to an American parent (with some conditions).

What types of accounts are being disclosed?

Revenue Canada discloses most financial account types to the IRS. These include savings, chequing, and business accounts. Thankfully RRSP, RRIF, RESP and TFSA accounts are exempt from this reporting. This does however include joint accounts, where information is shared about accounts held between a U.S. person and a non-U.S. person.

What kind of data is being shared?

Names & addresses of account holders (including non-U.S. persons), account numbers, account balances or values, and data about payments such as interest, dividends, other income and proceeds of disposition.

Are you a U.S. person?
Still think you can hide form the IRS?
Unsure how to proceed?

As a U.S. person you must file a U.S. tax return, regardless of U.S. source income, where you live or whether you have tax due. You must also file an Financial Bank Account Return (FBAR) if you exceed the filing threshold. The FBAR itemizes your financial assets which should match what Revenue Canada is sharing with the IRS.

The IRS continues the Streamlined Foreign Compliance program designed to help non-compliant individuals become compliant with their citizenship-based tax obligations. This program may wave the onerous penalties as they relate to non-compliance on the FBAR returns.

The CBC has a brief article on this.

Contact us to discuss your situation and how we can help clear up your back taxes.

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