US Citizens in Canada Should Comply with IRS Disclosure RequirementsBy Andrew Rickard | August 01 2014 02:24PM
PricewaterhouseCoopers (PwC) is urging American citizens who are living in Canada to make sure they comply with the Internal Revenue Service’s (IRS) asset disclosure requirements.
In a statement issued on July 30, PwC suggests that, with the implementation of the Foreign Account Tax Compliance Act (FATCA), US citizens living in Canada should participate in one of the US offshore voluntary compliance programs.
FATCA requires American financial institutions and corporations to disclose if any of their employees or clients are US citizens living in Canada. PwC says this puts US citizens who have not come forward to report their assets and accounts in danger of discovery.
"Most individuals can follow the 2014 Streamlined Filing Compliance Procedures, which apply to those who may not have been aware of their filing requirements and did not willfully fail to report their accounts," notes PwC. "In the majority of cases, individuals who fall under this program are required to report three years of tax returns."
PwC also points to the Offshore Voluntary Disclosure Program (OVDP), which is designed for individuals who are concerned that their failure to report foreign income and assets might be viewed by the IRS as wilful and therefore subject to penalties. The voluntary disclosure period under the OVDP is the most recent eight tax years.
"In many instances, citizens reporting for the first time find that they owe little or no taxes, but simply need to disclose income and assets," says PwC. "Coming forward before being investigated significantly mitigates the risk of penalties and provides individuals with greater clarity on their responsibilities to the IRS."