IRS Compliance Deadlines

On September 28, 2018, i.e. in four days, the IRS is terminating the 2014 Offshore Voluntary Disclosure Program (O.V.D.P.) which may trigger very serious legal consequences for eligible non-compliant US taxpayers. The program allows US persons who are willfully non-compliant with their US tax- and foreign financial accounts reporting obligations to avoid criminal charges and excessive civil penalties that would otherwise apply, by voluntarily disclosing all their foreign assets, filing original or amended US tax returns for the previous 8 tax years and paying outstanding taxes, along with penalties for outstanding tax liabilities.

Many taxpayers may believe they always have a choice to take the less expensive route offered by the Streamlined disclosure procedures by mistakenly considering themselves eligible. Indeed, coming in compliance under Streamlined Domestic Offshore Procedures  would only cost a taxpayer 5% penalty over the highest balance of their unreported foreign financial accounts (or even no penalty at all for qualified non-residents under Streamlined Foreign Offshore Procedures) and result in paying the outstanding tax liabilities for only 3 to maximum 6 years in some cases, with no additional tax penalties, as well as in filing fewer tax forms. But as appealing as it may sound, in certain cases Streamlined Procedure may not be an available option. 

 Unlike with O.V.D.P. program, Streamlined Procedures are not considered amnesty and thus filing under Streamlined Procedures does not fully protect taxpayers from civil penalties and criminal charges should IRS doubt the conduct was non-willful. Therefore, for those non-compliant US persons who were aware of FBAR reporting requirements and their US tax obligations, the O.V.D.P. program currently remains the safest and the only solution to receive the amnesty and avoid civil penalties and even criminal charges. 

 It is always suggested to seek professional assistance from a qualified cross-border tax specialist to find out whether you qualify under O.V.D.P. or under a Streamlined Procedure. And since the O.V.D.P. program will be gone in just 4 days, we urge those US persons who think they may not be eligible under Streamlined Procedures to get professional advice immediately and to use this last chance to come forth and take advantage of the O.V.D.P. amnesty program while it is still possible. 

 The IRS has also announced on numerous occasions this year that the Streamlined Procedures may also be closed in the near future. But this information has neither been confirmed yet, nor was the date officially set. Those taxpayers who were unaware of their US tax obligations and foreign assets reporting obligations or were otherwise non-willful, are urged to come into compliance under the Streamlined Procedures while they remain available. 

 

OVDP

On March 13, 2018, the IRS announced that it will be winding down its 2014 Offshore Voluntary Disclosure Program (“OVDP”) by September 28, 2018.  The OVDP is a modified version of earlier OVDP’s and was made available to taxpayers who wish to voluntarily disclose their offshore accounts and assets to avoid the risk of criminal prosecution and limit exposure to civil penalties.  Accuracy related penalties including penalties for failure to file and failure to pay are assessed.  In addition, the “offshore penalty” for failure to report all offshore financial assets is equal to 27.5% (50% in some cases) of the highest aggregate value of assets subject to the OVDP.  Pre-clearance with the Criminal Investigation Lead Development Center is required prior to participation in the OVDP.

“Taxpayers have had several years to come into compliance with US tax laws under this program.  All along, we have been clear that we would close the program at the appropriate time, and we have reached that point.  Those who still wish to come forward have time do so” said Acting IRS Commissioner David Kautter.

Shutting down the OVDP does not mean that the IRS has decreased its enforcement activity.  On the contrary, the IRS has developed a number of tools to detect non-compliant taxpayers such as the Foreign Accounts Tax Compliance Act (“FATCA”), cooperation by other non-US banks in disclosing accounts owned by Americans and whistleblower leads.  Nevertheless, “stopping offshore tax noncompliance remains a top priority of the IRS” according to Don Fort, Chief, IRS Criminal Investigation.

The IRS will continue offering the following options to comply with US tax and information reporting obligations:

  • IRS-Criminal Investigation Voluntary Disclosure Program;
  • Streamlined Filing Compliance Procedures;
  • Delinquent FBAR submission procedures;
  • Delinquent international information return submission procedures.

The Streamlined Filing Compliance Procedures (“SFCP”) have been very popular among those non-compliant US taxpayers who are not at risk for criminal prosecution and whose delinquency did not result from willful conduct on the part of the taxpayer.  The program is available to US individual taxpayers residing out the US and those residing in the US.  Unlike the OVDP, penalties are abated but the risk of an audit or scrutiny of years prior to the covered years under the SFCP and criminal prosecution is not eliminated.

As with the OVDP, at some point in time, the IRS has expressed that the SFCP may also be eliminated.  Therefore, there is still time to come forward either under the formal amnesties – OVDP or the other options for complying with the US tax obligations. Otherwise, the taxpayer will have no choice but to come under the more stringent traditional voluntary disclosure programs.

Coronavirus stimulus package

I was surfing the internet and came across an article that said I had to report my US real estate to the Canada Revenue Agency (“CRA”).  This can’t be right, so I called my tax advisor and she told me that was in fact true in certain circumstances. She went on to tell me that the penalty for not informing the CRA of my US real estate could cost me up to $2,500 per year!  I have owned that property for 8 years.  That’s a cost of $20,000! What am I going to do?!

The above situation is extremely common.  Canadians buying foreign real estate as an investment and renting it out are subject to foreign reporting obligations.  Failure to report certain property to the CRA may result in a failure to file penalty of up to $2,500 per year.  The issues are further complicated if the rental property is held by a US LLC.  The penalty shoots up to $12,500 per year.  It could be costly to get caught up.  Fortunately, the CRA has a Voluntary Disclosure Program (“VDP”), to encourage individuals and businesses to come forward and resolve issues of noncompliance under current regulations that span one or more tax years.  Coming forward under the VDP, is a chance to get caught up on past delinquencies and avoid paying large penalty and interest charges.

The application process requires full disclosure of information relating to income tax which is at least one year past due, or generalized and harmonized sales tax (GST/HST) that is one reporting period late.  The program also allows taxpayers to completely disclose information regarding other taxes such as excise tax, duties (under the Excise Act, 2001), and source deductions.  In exchange for coming forward, the taxpayer may have interest and penalties either waived or adjusted, as well as avoiding any criminal prosecution for tax avoidance.

But wait….

When March 1, 2018 arrives, there will be new rules for those interested in the Canadian VDP for non-compliant taxpayers to consider. There will be two VDP tracks: General and Limited.

Under the General Program, taxpayers will not be charged penalties and will not be referred for criminal prosecution related to the information being disclosed. The CRA will provide partial interest relief for years preceding the three most recent years of returns required to be filed.  The determination for which VDP track you will qualify will be on a case-by-case basis.  Some of the factors used by the CRA in making the decision include: dollar amount involved, number of years of non-compliance and the tax knowledge/sophistication of the taxpayer.

Changes to the General Program include the requirement of all unpaid taxes to be paid as a condition of qualifying for the program.  This means that the payment of unpaid tax must be made before you are admitted into the VDP.

Another change affects the “no-names” disclosures previously allowed.  The process of making a disclosure on a no-names basis has been eliminated.  A new “pre-disclosure discussion” maybe had by the taxpayer or the taxpayer’s representative with a CRA official, anonymously, however this discussion does not guarantee acceptance into either of the VDP tracks.

The new Limited Program, which will launch on March 1st, will not be as generous as the General Program.  Interest and penalties will not be waived or adjusted, however, criminal prosecution can still be avoided.  Applications by large corporations (i.e. having revenues in excess of $250 million in at least 2 of the last 5 taxation years, including related parties), will generally be considered under the Limited Program.  As with the General Program, any unpaid taxes must be paid before admittance to the VDP.

As has been the CRA’s position in the past, it will not accept taxpayers into either VDP track if they are already known to the agency or if a VDP submission was previously made.

If you have past due returns or forms with the CRA, please contact us as soon as possible before the rules change on March 1st.

With increased collaboration between friendly nations, CRA is working to deter and identify those who participate in off-shore tax evasion.  Independent agreements to assist each other are coupled with a membership in the Joint International Taskforce on Shared Intelligence and Collaboration (JITSIC). The information exchange has supplied data on off-shore accounts for years now but due to the exposure of the Panama Papers, there has been an increased focus on tax evasion by most nations, thus the teamwork has intensified.

CRA currently has 990 audits and 42 criminal investigations underway.  The federal government is acutely aware of this multi-billion dollar issue and is investing a billion dollars itself to tackle it.  They have studied the complexity of this global problem and will continue to allocate resources to recoup the lost funds, working closely with provinces and territories as well.  The additional funding is allowing the CRA to move forward with coordinated efforts to ensure that all of those who benefit from Canada’s great lifestyle pay their fair share for it.

CRA’s promise to vigorously pursue those breaking the law and hold them accountable extends from the participants to those that assist them.  One proof of this is the $44 million assessed in 3rd party penalties in 2016 against tax advisors.  Another example would be the long list of criminal tax evasion cases in the federal court queues.  The agency is closely monitoring money transfers over $10,000 heading to specific off-shore destinations regardless of their Canadian source.  They are also evaluating 100% of large MNC’s for tax avoidance risk, analyzing high net worth taxpayers they deem risky for tax affairs and using paid informants to gather information.

Much of this work is done through the JITSIC and its 37 participating nations, each gathering and sharing data and information.  They have a common commitment to find effective and efficient ways of handling tax evasion or avoidance.  Since the Panama Papers went public, the member nations have shared different tools they use to detect criminal acts and trained each other to understand the results of data gathered.  They have established structures and mechanisms to better analyze the data and successfully impede high risk targets’ illegal acts.  In addition, they have secured ways of sharing sensitive information that adhere to legal frameworks and they have increased the speed with which this information passes between member nations.  These enhancements have aided their coordinated responses to locate criminal activities and secure moneys that would otherwise be lost to them.

If you hold any non-Canadian financial assets with an aggregated tax cost of over $100,000 which you never disclosed on your Canadian tax return, please contact us immediately.  We will advise and assist you with tax compliance options to minimize penalties.

IRS

US expatriates in Canada and Canadians in the U.S. need to remember that the border, when it comes to tax obligations, may be closer than they think. The income tax treaty (the “Treaty”) between the US and Canada allows for Canada Revenue Agency (“CRA”) to collect tax, interest, and civil penalties from delinquent US taxpayers residing in Canada even if they never step on the US soil. As proven by the recent case in Donald Dewees vs. United States (No. 1:16-cv-01579, 8/8/2017), living in Canada does not negate your responsibilities to file accurate US income tax returns and tax disclosures.

In 2009, Mr. Dewees discovered his US citizenship came with some responsibilities and costs when he submitted eight years of US income tax returns and forms FinCEN 114, The Report of Foreign Bank and Financial Accounts (FBARs), under the Offshore Voluntary Disclosure Program (“OVDP” or the “Program”). His US income tax returns contained Form 5471, Information Return of US Persons with Respect to Certain Foreign Corporation, for his controlling interest in a Canadian consulting corporation which he formed in 1997.

OVDP was developed by the IRS to encourage noncompliant taxpayers who were reluctant to come forward with foreign asset reporting delinquencies due to the uncertainty surrounding their potential liability. One of the stipulations of the participation in the Program is that the taxpayer must not be under investigation by the IRS for foreign or domestic disclosures or payment noncompliance. In exchange for voluntarily declaring the oversight, a taxpayer could avoid a myriad of penalties on outstanding returns and taxes due using the uniform penalty structure offered by the Program. In addition, there is the opportunity to avert a criminal prosecution by the Federal Department of Justice regarding the lapse.

Under the OVDP uniform penalty, Mr. Dewees was assessed US$185,862 related to his failure to file FBARs for tax years between 2003 and 2008. His failure to file Forms 5471 was not taken into account. Mr. Dewees refused to remit the penalty and withdrew from the OVDP.

The result of his decision was a different assessment and a prolonged and costly effort to challenge the IRS position. His non-filed 5471s now became the new subject of penalty.

The IRS has the power to impose $10,000 (and up to $50,000) penalty for each year a form 5471 is not filed. And that’s what they did with the help of the CRA when in May of 2015, Mr Dewees received a notification from the CRA that his Canadian tax refund was being withheld under Article XXVI(A) of the Treaty. Mr. Dewees immediately sent payment to the CRA for US$120,000 plus interest totaling US$134,116.34, which was promptly remitted to IRS.

Though legal action between Mr. Dewees and IRS ensued, nothing favored the plaintiff in his efforts to attain a refund for what he paid to the IRS. Mr. Dewees attempted to argue that the Treaty was unconstitutional as it defied the 8th Amendment’s Excessive Fines Clause. He also contended the Treaty ignored both the Due Process Clause and the Equal Protection Clause of the 5th Amendment. In the eyes of the Court, Mr. Dewees failed to supply an argument substantiating his due process and excessive fines claims, while his equal protection claim lacked subject matter jurisdiction.

There are lessons to be learned from this case by US expatriates, as well as foreign nationals residing in the U.S. The IRS is actively redirecting resources toward foreign and transnational transactions to locate tax evasion activities. Full compliance and total transparency are the sensible way to go. Using a cross-border tax specialist is recommended especially given the expanding network of the IRS.

Offshore income and account disclosures to the IRS continue, but even with all the activity, what to expect remains uncertain. The streamlined program, first announced in June of 2014,1 was a welcome relief for many taxpayers with undeclared foreign accounts who had faced unpalatable choices that included the offshore voluntary disclosure program, so-called quiet disclosures,2 or the hope of not being caught.

Of those, only the OVDP offers finality and predictability. Yet it comes at a heavy price: eight years of tax returns, eight years of foreign bank account reports, payment of taxes, interest, and a 20 percent accuracy penalty on all taxes. The kicker, though, is a 27.5 percent penalty (or 50 percent in some circumstances)3 on the highest aggregate balance of all foreign accounts for the prior eight years.

The materials are then audited if necessary to confirm that the filings are correct and to provide additional materials that the IRS might need. The process ends with a closing agreement. But as many practitioners can attest, after spending years in the program and then writing a painful check, some clients wonder if the security was worth the price.

The advent4 of the streamlined programs brought new, alluring options. In exchange for three years of returns, six years of FBARs, and a possible 5 percent penalty on foreign accounts, taxpayers can now come into compliance. The catch is that taxpayers must certify, under penalties of perjury, that their mistakes were non-willful. If the IRS has reason to doubt your word, it can be painful.

Between the various amnesty programs, the IRS has already collected more than $10 billion. And with the Foreign Account Tax Compliance Act, even those who have been slow to answer the IRS’s call are coming in. Financially, the comparison between the OVDP and streamlined programs can be stark: 27.5 percent versus 5 percent on the penalty rates, 20 percent penalty on taxes due versus 0 percent, and five fewer returns to file. Understandably, many taxpayers have an easier time deciding to file streamlined rather than OVDP.

Still, there is a decided difference between them. In some ways, the IRS gives you what you pay for. The OVDP (in effect) precludes criminal prosecution and ends in a closing agreement. In contrast, streamlined filers can face a civil audit, or conceivably (though unlikely) even prosecution.

But while one can reasonably expect a streamlined audit to be difficult, that information is not terribly helpful for a taxpayer trying to choose between disclosure programs. Are streamlined audits more taxing than OVDP reviews? Longer? Cheaper? The certification that streamlined submissions require is more revealing than almost any other tax filings, and comes with its own worry about penalties of perjury. And although it seems reasonable to expect an audit to happen within a year or two of filing, the IRS has up to six years (the FBAR statute of limitations, assuming non-willfulness) to go after you. That is a long time to worry. Knowing what to consider and expect, even in general terms, could help taxpayers make better choices.

A key for any streamlined filer is to be non-willful; indeed, one must certify that. Negligence, inadvertence, or mistakenness are all OK, but intent to conceal or evade taxes is not. The certification requires the taxpayer to:

provide specific reasons for your failure to report all income, pay all tax, and submit all required information returns, including FBARs. If you relied on a professional advisor, provide the name, address, and telephone number of the advisor and a summary of the advice. If married taxpayers submitting a joint certification have different reasons, provide the individual reasons for each spouse separately in the statement of facts.5

You may believe your inadvertence was non-willful, but the IRS could disagree. And FATCA has given the IRS a treasure trove of data. If you knew you were supposed to report, the IRS may say you were willful. Moreover, the IRS uses a “willful blindness” concept. Essentially, it is a conscious effort to avoid learning about the IRS or FBAR reporting.6

Willfulness involves a voluntary, intentional violation of a known legal duty. In taxes, it applies for civil and criminal violations. The failure to learn of filing requirements, coupled with efforts to conceal the facts, can spell willfulness. Watch out for conduct meant to conceal, such as:

  • setting up trusts or corporations to hide your ownership;
  • filing some tax forms and not others;
  • keeping two sets of books;
  • telling your bank not to send statements;
  • using code words over the phone;
  • cash deposits and cash withdrawals; and
  • moving money from one bank to another when banks don’t want undisclosed U.S. accounts.

Even if you can explain one failure to comply, repeated failures can elevate conduct from inadvertent neglect into reckless or deliberate disregard. Those taxpayers who have not yet made the OVDP versus streamlined choice should consider their facts carefully. Most taxpayers who filed a streamlined disclosure will not be audited. But those who are should be careful about how to respond and precisely how to conduct the audit.

  1. Streamlined Program
  2. Domestic Versus Foreign

The streamlined program is actually two programs: the Streamlined Domestic Offshore Procedures, and the Streamlined Foreign Offshore Procedures, usually referred to as “domestic” and “foreign” streamlined, respectively. They have similar eligibility requirements, but there are three key differences.

The foreign streamlined program is available only to taxpayers residing outside of the United States for more than 330 days during any one of the prior three years7 and only if the United States is not their “abode” within the meaning of section 911(d)(3) and reg. section 1.911-2(b).8 Thus, the foreign streamlined program is essentially intended for expats. It is a liberalized continuation of the 2012 OVDP streamlined option for people living abroad.9

The domestic streamlined program requires a 5 percent miscellaneous offshore penalty. The foreign streamlined program has no penalty. Both are often a good deal, especially compared with an OVDP penalty edging towards 50 percent for an increasing number of taxpayers.10

Finally, the domestic streamlined program allows only amended tax returns. The foreign streamlined program allows you to file original tax returns. Expats who are busy complying with their home (foreign country) tax obligations have a reasonable explanation for not remembering to file taxes in what is, essentially, the “foreign” United States. But for taxpayers living in the United States, forgetting to file a tax return is much less understandable, and for the IRS, much less forgivable.

  1. Filing Requirements

Once eligibility is settled and a taxpayer is sorted into the domestic or foreign program, what are the next steps? The basics are straightforward, and match up with the relevant statutes of limitation for non-willful taxpayers.11 The programs also require specific IRS forms on which the taxpayer will certify their non-willfulness and satisfy other requirements.

  1. Tax returns.

First, you must file tax returns for the three most recent years, based on the most recent past filing deadline.12 There has been some confusion about the relevant measure. Prior guidance from the OVDP hotline (the main source of technical advice when the various IRS websites do not address a question) suggested that the filing deadline itself is what matters.

More recent comments from the OVDP hotline suggest that the filing date will control, matching up with the statute of limitations. Here is a quick example of the difference. Imagine U.S. resident Winston files for an extension of his 2016 tax return. He then files his 2016 tax return on June 18, 2017. On June 19 he files a domestic streamlined submission.

Which returns does Winston include in the submission? If the filing deadline controls, Winston should file amended returns for 2013, 2014, and 2015 for his streamlined submission.13 This is because the filing deadline for his 2016 return has not yet passed — it has been extended until October 15, 2017.

By contrast, if the filing date controls, as recent guidance suggests, his amended streamlined returns would be 2014, 2015, and 2016. Of course, the actual filing date is still what will control for most statute of limitations purposes.14 If possible, it may be best to ensure that taxpayers do not file extensions before the streamlined submission. The most recent return will have to be amended in the streamlined program in any event.15

  1. FBARs. 

One must file six years of FBARs. Oral guidance from the OVDP hotline on the deadline question seems inconsistent, and online guidance refers to the deadline without clarification.16 Before 2017 the FBAR filing deadline was always June 30. Beginning in 2017, Congress moved it to match the individual tax return filing deadline.17

To avoid confusion, for 2016 FBARs (due April 18, 2017), the Treasury Financial Crimes Enforcement Network (which oversees FBAR compliance) provided an automatic six-month extension to file FBARs until October 15.18 No request is necessary for the 2016 FBAR extension, but FinCEN has not indicated whether it will keep the extension available or automatic for future years.

Returning to Winston, if he files his streamlined submission on June 19, what is his FBAR period? Based on recent OVDP hotline guidance indicating that the filing date controls, the most recently filed FBAR will be the last year for streamlined purposes. This would be consistent with the attempt to match the FBAR and tax return periods.19 Thus, Winston’s most likely FBAR period will be 2011 through 2016.

  1. Certification — Form 14654 and Form 14653. 

The domestic streamlined program requires Form 14654 and the foreign streamlined program requires Form 14653, both of which must be signed under penalties of perjury. Each form has three sections. The first section for each is a summary of the taxes and interest due for the three filed tax returns.

The second section of each form differs. On the foreign streamlined Form 14653, the second section consists of a checkbox for each of the three tax return years. It asks taxpayers to certify that they meet the nonresidency requirement in at least one of the years. This section is also covered by penalties of perjury, so be prepared to document the number of days spent in the United States, if any.

For the domestic streamlined Form 14654, the second section is used to compute the 5 percent penalty.20 The Form 14654 requires the account name, type, location, account number, opening date, and balance of the account as of December 31 for the relevant year. The same information is required for each of the six FBAR years.

There is limited space on the Form 14654 for the accounts. Some practitioners provide a continuation sheet with the actual account information, and simply list the totals on the form itself. In those cases, it is important that the taxpayer sign the continuation sheet under penalty of perjury, or the IRS may need to follow up.

The third and final section is common to both Form 14654 and Form 14653. You provide a certification statement, which is a narrative explanation of the taxpayer’s facts and circumstances, along with a certification that the taxpayer’s errors were not willful. This certification statement is the heart of a streamlined submission and the first battleground in a streamlined audit.

  1. The Streamlined Audit

Streamlined audits start like any other: with a notice of examination. When a streamlined submission is selected for review, remember what the IRS has. The taxpayers have made a comprehensive submission disclosing their failure to report foreign income and assets. They have paid all taxes and interest due and often a significant penalty. The IRS has cashed the check, reviewed the returns, and read the penalties of perjury statements. But they still have questions. This is an eggshell audit: Tread carefully.

A criminal referral is possible either during the exam or at its conclusion. Representatives should discuss this with clients early, especially if the facts are bad. Keep the willfulness standard and burden in mind when preparing any streamlined submission and throughout any audit.

However, remember that the taxpayer was not caught. He voluntarily came in from the cold, paid a penalty, and it is hoped will cooperate fully during the exam. That cooperation is terribly important and should help work against a criminal referral. But if it does not, it may be helpful in negotiating lesser criminal penalties down the road.

The IRS will review the returns for correctness and verify the numbers, but willfulness will likely be their focus, as it should be for the taxpayer. Noncriminal willful penalties can be 50 percent of the account balance per year, and up to 100 percent of the account balance.21 Criminal penalties include even higher fines and jail time.22 The definition of willfulness, along with the relative burdens of proof, should be guiding principles.

  1. Willfulness and Non-Willfulness

Willfulness is an “intentional violation of a known legal duty,”23 commonly referred to as the Cheek standard. It is subjective, so the taxpayers’ personal knowledge and understanding of their obligations are relevant. Even irrational but sincerely held beliefs could conceivably be relevant. Good-faith misunderstandings of legal duties are typically viewed as non-willful.24

The streamlined programs provide their own loose definition of non-willful conduct. The IRS informs taxpayers that non-willful conduct is “conduct that is due to negligence, inadvertence, or mistake or conduct that is the result of a good faith misunderstanding of the requirements of the law.”25 Even behavior rising to the level of gross negligence is technically acceptable, as long as it remained non-willful.26

The IRS bears the burden of proving willfulness.27 Streamlined audits might begin with the IRS thinking that the taxpayer was willful, but the Service must still adequately document it from the evidence.

  1. Pre-Audit Considerations

The certification statement is the most important form of audit preparation for a streamlined audit. The certification statement provides the IRS with a first and guiding impression of the taxpayer’s story. Consider the facts, types of questions the IRS may ask, risks that answers may pose, and how those answers affect a potential willfulness finding.

The certification statement is where one explains what happened and perhaps preemptively addresses IRS concerns. In streamlined filings one does not provide bank statements with the submission, but they will almost certainly be the first request by the auditor. Any landmines in the bank statements are best dealt with at the beginning, when you can control the first impression.

Do the account statements show active trading or wire transfers? Are the funds pre- or post-tax? Were the accounts related to any U.S. activities? Why were they opened in the first place, and why at specific institutions? Was a non-U.S. passport used to open the account?

Did the foreign institution tell the taxpayer about U.S. obligations? Were there any problematic instructions, such as “hold mail” orders, and if so, why? Was there income, was it reported, and was foreign or U.S. tax paid? Why did the taxpayer’s Schedules B show no foreign accounts? Were these accounts ever discussed with a return preparer?

More uncommon situations, such as controlled foreign corporations, require the same level of consideration. Why was the entity originally formed? When, and who did so? What does the entity do? Did it earn income? Was it reported and were taxes paid, and if not, why not? Was it tax compliant in the local jurisdiction? Did the taxpayer consult any tax advisers on U.S. compliance?

Were there business partners, and did they report the entity on their tax returns? Did the return preparer know about the entity, and did he mention any U.S. tax requirements to the taxpayer? How active was the taxpayer in the business, especially compared with domestic U.S. employment? Why was the Form 5471 not on the original return, and why was the entity not otherwise disclosed?

Not every question must be addressed under penalties of perjury, but it is certainly a good idea to consider them beforehand. The more you can accurately shape an impression in the certification statement, the more likely you are to avoid an audit by making the initial reviewers at ease with any problems in the amended tax returns. A comprehensive certification statement will also be the roadmap for the first parts of an audit and the baseline against which later details will be assessed.

  1. Audit Commencement — Initial Interview 

At some point after the taxpayer receives a notice of examination, the auditor will want an interview with the taxpayer to review the submission. The manager may attend, and perhaps even a streamlined technical coordinator, and they may remain involved throughout the exam. The IRS personnel might be reasonably acquainted with the file, and even with your client’s public social media presence. Be familiar with your client’s background, at least regarding any foreign accounts and income at any time.

Lawyer and client should be conversant with the certification statement. Many of the auditor’s questions will concern the statement, but the taxpayer is also being assessed on the document’s truthfulness. An intentional misstatement in the certification statement, even by a non-willful taxpayer, can be an independent basis for penalties and possibly even criminal prosecution.

How could the agent know? The agent may have additional sources to check. Auditors can conduct interviews with third parties (including the tax return preparer). Remember, the IRS would probably not have selected the taxpayer for review if it were satisfied with the submission. Any inconsistencies found with the certification statement during the interview could raise suspicions or require further explanation and document production.

Prepare for a comprehensive interview, although there could be additional interviews later. The IRS will issue document requests, and there will be discussions with the agent and possibly other IRS personnel. The IRS may develop a sense of your client’s situation and potential willfulness at this early stage. Humanizing your client can pay dividends later.

You should generally follow the interview with a letter to the auditor documenting the interview itself. That letter can be helpful to begin framing the terms of the audit. You might remind the IRS of their burden of proof and willfulness standards. Put your client’s narrative within that standard, and, if necessary, document any potential improprieties or aggressiveness from the IRS.

  1. Document Request Phase 

Before or after the interview, expect information document requests. The first request will probably be for account statements, so have them handy. This is an easy way to build goodwill with the auditor, and the statements should conform to your submission.

Expect requests concerning any questionable items on the returns. Corporate formation documents for offshore entities are common requests, as are account opening and maintenance records and correspondence with foreign banks. Older records might be unavailable.

In our experience, simply stating that old records have been lost, or were never retained in the first place, might be met with skepticism from the IRS. The IRS might expect you to have any documents that would inform an item on the return (for example, purchase orders for securities that would establish basis or be used in a passive foreign investment company excess distribution calculation or in contracts for services income). Expect the IRS to ask how you were able to prepare the return without the materials and what efforts the taxpayers made to obtain them.

The situation could be avoided if explained in the streamlined submission itself. The certification statement is signed under penalties of perjury, so it may not always be the best place to make affirmative statements about what records are and are not available. Still, those explanations can be prepared in a cover letter for the submission or in a statement on the return.

Be prepared for the audit scope to expand, at least informally. This is not like the OVDP exams, in which the IRS rarely demands information from outside the program’s eight-year period. In a streamlined audit, the IRS may ask questions regarding activities outside the tax years at issue. If those activities conceivably bear on willfulness, there is a risk the IRS will ask about them.

For example, suppose the taxpayers have a period without income, but publicly available records indicate that they had a business. The IRS may not be able to audit those long-past years, but they might evaluate the certification statement in light of past inconsistencies. Be prepared with an understanding of the facts, and be ready to advocate to keep the audit focused.

Summonses are possible during streamlined audits. The IRS may follow repeated requests with a summons, even when the documents are unavailable. Keep a clear record of all your responses to the requests and all conversations with the agent.

Each call with the agent, especially when responding to a document request, should be accompanied by documentation. Be ready to prove you have done your best to respond to requests in a timely and cooperative manner. Doing so could allow you to question the basis for the summons, especially when the taxpayers previously responded to the best of their ability.

Consider involving the manager, too. The manager may have signed off on the summons. Even so, involving her in your response strategy may avoid relying on the agent to communicate your concerns to the manager. If necessary, try to involve IRS counsel. Continue to document every conversation. It may help during the audit, in appeals, or in court.

Summons enforcement requires the IRS to follow all appropriate procedures. Section 7602 gives the IRS authority to issue first-party summonses, but a summons is only valid if it: (1) is issued for a legitimate purpose; (2) seeks information that “may be relevant” to the exam; (3) seeks information that is not already in the IRS’s possession; and (4) follows all administrative proceedings.28 The summons rules for agents are in Internal Revenue Manual section 25.5.

The “may be relevant” prong of the test is extremely broad. It typically means that the information need only “throw light upon the correctness of the taxpayer’s return.”29 But its breadth is limited, and the IRM defines “may be relevant” as follows:

The “may be relevant” standard of section 7602 means any information that “might shed light” on the correctness of the taxpayer’s return (or any other proper issue in a legitimate investigation, such as the location of collectible assets). The word “might” in this standard means that the Service has a realistic expectation, rather than an idle hope, that something useful may be discovered. 30 [Emphasis added.]

The IRS is prohibited from issuing summonses to make arbitrary, irrelevant, unreasonable, or oppressive demands.31 If a summons demands items that had not been sought in prior requests, that may be a reason to request a conference with IRS counsel. If the IRS accepts that some records are unavailable but issues a summons for other similar records, you may want to ask for an explanation, or at least document it.

Having a clear record of all communications and documenting responses to the IRS can be tremendously helpful. Summonses are generally disfavored for cooperative taxpayers.32 A taxpayer who can show good-faith compliance with prior requests (such as letters to banks for records that the banks ignored) has a stronger case to make to IRS counsel when requesting withdrawal of the summons or even in a motion to quash, if ultimately necessary.

Of course, most summonses are issued according to procedure, and for valid purposes. Consequences for not responding can be grave. But even if you are forced to comply with an overly aggressive summons, it is yet another opportunity to document your objections and lay the foundation to have them heard by IRS Appeals.

  1. Beyond the Audit

As the audit winds down, you may have a good sense from the agent of her conclusions. If the IRS is leaning toward a willfulness determination, your document exchanges should have provided extensive context for any irregularities. If you have a good relationship with the auditor, you can try to suggest lesser penalties.

The IRS can impose a range of willful and non-willful penalties.33 If the finding is non-willfulness, the domestic streamlined 5 percent penalty the taxpayer already paid overrides all others.34 But even for willful taxpayers, the IRM allows mitigating factors to lower the penalty.

Mitigation is available if a taxpayer meets four criteria: (1) the taxpayer has no history of criminal tax or Bank Secrecy Act convictions in the past 10 years and no prior FBAR penalties; (2) no funds in the accounts were associated with illegal source income or were used to further criminal purposes; (3) the taxpayer was cooperative; and (4) the IRS has not imposed a fraud penalty that concerns the foreign income. Consider highlighting and documenting these factors throughout the streamlined audit.

Remember, a streamlined audit is just an audit. All audits allow a taxpayer to go to IRS Appeals. Any irregularities in the audit (such as improper questions, unreasonable requests, and unsupported assertions in the willfulness determination) are grounds for Appeals to question the auditor’s findings. Each irregularity should be carefully documented when it occurs, and they all should resurface in the protest.

You might be able to settle for a lower penalty, even if the auditor’s willfulness finding is well supported. If going to Appeals does not lead to a lower penalty, you can consider litigation. However, consider the possibility of a criminal referral, even though this possibility may become more remote the further a taxpayer gets into the administrative process.

III. Conclusion

Streamlined audits are difficult and present significant challenges for both taxpayers and representatives. But no matter how challenging, they are always possible and should be considered when deciding whether to enter the OVDP or the streamlined program. Only some features of streamlined audits have been highlighted here, and there may be significant variation. Given the audit stakes, gather any information you can.

Representatives and taxpayers have multiple ways to influence the process, beginning with the choice to enter a streamlined program. A representative should always consider how his positions would be viewed in the future. Guard against inconsistencies with the certification statement, the early interview, and every document response.

Carefully focusing on the willfulness standard and the IRS’s burden can help keep you ahead of problems. Ideally, you can show the IRS that the taxpayer was not willful or that mitigating factors should be considered.

FOOTNOTES

1 The IRS revised the OVDP at the same time they created the new streamlined programs. These 2014 revisions increase the offshore penalty from 27.5 percent to 50 percent if the taxpayer’s accounts were held with an ever-growing list of “bad” banks and financial advisers. IRS press release, “IRS Makes Changes to Offshore Programs; Revisions Ease Burden and Help More Taxpayers Come Into Compliance” (June 18, 2014).

2 That is, disclosing their foreign accounts outside the protection of any program.

3 IRS, supra note 1; IRS, “Foreign Financial Institutions and Facilitators.”

4 More accurately, an expansion of a more limited streamlined option under the 2012 OVDP that was available to some taxpayers living outside the United States.

5 IRS, “Streamlined Filing Compliance Procedures for U.S. Taxpayers Residing Outside the United States: Frequently Asked Questions and Answers,” at Question No. 13.

6 IRM section 4.26.16.6.8.1(5).

7 IRS, “U.S. Taxpayers Residing Outside the United States” (“Individual U.S. citizens or lawful permanent residents, or estates of U.S. citizens or lawful permanent residents, meet the applicable non-residency requirement if, in any one or more of the most recent three years for which the U.S. tax return due date (or properly applied for extended due date) has passed, the individual did not have a U.S. abode and the individual was physically outside the United States for at least 330 full days.”).

8 IRS, supra note 5, at Question No. 1.

9 The 2012 OVDP streamlined option had stricter requirements, including a provision that required taxpayers to have $1,500 or less in tax liability to use the option.

10 See IRS, “Foreign Financial Institutions,” supra note 3.

11 See section 6501(a) (default three-year statute of limitations from the date of filing a tax return); 31 U.S.C. section 5321(b)(1) (six-year statute of limitation for imposition of civil penalties for filings which include FBARs).

12 IRS, s upra note 7.

13 Recall that Winston must file amended returns because he resides in the United States, meaning he is in the domestic streamlined program. Original returns are permitted only for the three streamlined tax returns in the foreign streamlined program.

14 See section 6501 (“Except as otherwise provided in this section, the amount of any tax imposed by this title shall be assessed within 3 years after the return was filed” (emphasis added).).

15 Of course, any filed return should be as complete and accurate as possible, and intentionally leaving items off the return could be construed as willfulness.

16 IRS, supra note 7.

17 Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, P.L. 114-41, section 2006(b)(11), 129 Stat. 443 (2015).

18 Treasury, “New Due Date for FBARs” (Dec. 26. 2016).

19 Form 14654 includes a space for a seventh year of account information if the streamlined filing occurs between the tax return and FBAR deadlines, where the seventh year is the current-year FBAR. See IRS Form 14654 (“Note: Use this seventh year only if your 3-year covered tax return period does not completely overlap with your 6-year covered FBAR period (for example, if your 3-year covered tax return period is 2011 through 2013 because the due date for your 2013 tax return is passed, but your covered FBAR period is 2007 through 2012 because the due date for the 2013 FBAR has not passed).”).

20 The OVDP calculates its penalty based on the high balance during the year rather than the December 31 balance, and the OVDP penalty base follows slightly different rules than the streamlined penalty. Compare IRS, supra note 5, at Question No. 1, with IRS, “Offshore Voluntary Disclosure Program Frequently Asked Questions and Answers 2014,” Questions Nos. 35-41.

21 31 U.S.C. section 5321(a)(5)(C); IRM Exhibit 4.26.16-1 (“in no event can the aggregate willful penalties exceed 100 percent of the highest aggregate balance of all accounts to which the violations relate during the years at issue”).

22 31 U.S.C. section 5322.

23 Cheek v. United States, 498 U.S. 192 (1991); United States v. Bishop, 412 U.S. 346, 360 (1973) (“the word ‘willfully’ in these statutes generally connotes a voluntary, intentional violation of a known legal duty”); United States v. Pomponio, 429 U.S. 10, 12 (1976) (“willfulness in this context simply means a voluntary, intentional violation of a known legal duty”); IRM section 4.26.16.6.5.1(1).

24 See Cheek, 498 U.S. 192, 202 (“In this case, if Cheek asserted that he truly believed that the Internal Revenue Code did not purport to treat wages as income, and the jury believed him, the Government would not have carried its burden to prove willfulness, however unreasonable a court might deem such a belief.”).

25 IRS, supra note 7.

26 William Hoke, “Practitioners Question Use of OVDP Over Streamlined Program,” Tax Notes, Oct. 31, 2016, p. 632 (“‘Anything that doesn’t rise to the level of tax fraud or the willfulness standard for [the foreign bank account report] is fair game for streamlining,’ said John McDougal, special trial attorney and division counsel, IRS Small Business/Self-Employed Division. ‘As long as you weren’t fraudulent or willful in the FBAR sense, even gross negligence is an appropriate basis for filing streamlined.’”).

27 Cheek, 498 U.S. at 201-202 (“Willfulness, as construed by our prior decisions in criminal tax cases, requires the Government to provide that the law imposed a duty on the defendant, that the defendant knew of this duty, and that he voluntarily and intentionally violated that duty. . . . In this case, if Cheek asserted that he truly believed that the Internal Revenue Code did not purport to treat wages as income, and the jury believed him, the Government would not have carried its burden to prove willfulness, however unreasonable a court might deem such a belief.”); IRM section 4.26.16.6.5.1(3) (“The burden of establishing willfulness is on the Service.”).

28 United States v. Powell, 379 U.S. 48, 58 (1964).

29 United States v. Ryan, 455 F.2d 728 (9th Cir. 1971).

30 IRM section 25.5.4.5.1.2.

31 IRM section 25.5.4.5.2.

32 See IRM section 5.14.6.1(2) (“In general, the Service should issue summonses only when the Taxpayers (or other witness) will not produce the desired records or other information voluntarily.”).

33 See IRM sections 4.26.16.6.4 – 4.26.16.6.8.

34 IRS, supra note 7 (“A taxpayer who is eligible to use these Streamlined Domestic Offshore Procedures and who complies with all of the instructions below will be subject only to the Title 26 miscellaneous offshore penalty and will not be subject to accuracy-related penalties, information return penalties, or FBAR penalties.”).

END FOOTNOTES

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Document Attributes

Jurisdictions

United States

Subject Areas

Litigation and appealsAuditsReturn preparationForeign-source income

Magazine Citation

Tax Notes, Jul. 10, 2017, p. 241156 Tax Notes 241 (Jul. 10, 2017)

Authors

Robert W. Wood and Scott B. Weese

Affiliated Institution

Wood LLP

Tax Analysts Document Number

Doc 2017-52441

Tax Analysts Electronic Citation

2017 TNT 142-8

Special Reports

03/20/2017

The Border Adjustment: What Companies Need to Know

By Timothy Reichert and Perry Urken

Timothy Reichert and Perry Urken analyze how the adoption of a border adjustment by the United States would affect corporations.

 

Robert W. Wood practices law with Wood LLP (https://www.WoodLLP.com) and is the author of Taxation of Damage Awards and Settlement Payments, Qualified Settlement Funds and Section 468B, and Legal Guide to Independent Contractor Status, all available at https://www.TaxInstitute.com. Scott B. Weese is an associate with Wood LLP.

In this article, Wood and Weese discuss streamlined audit programs and the willfulness standard for disclosure of foreign bank accounts.

Copyright 2017 Robert W. Wood and Scott B. Weese.
All rights reserved.

IRS building

A U.S.-Canadian dual citizen living in Vancouver is being sued for over US$860,000 ($1.1 million) by U.S. tax authorities for failing to report bank accounts to them.

U.S. citizens (including dual citizens) with signing authority over non-American bank accounts are required to report them, along with the highest amount in the account during the year, on a form called a Report of Foreign Bank and Financial Accounts, or FBAR.

“To my knowledge, this is one of the first actions of enforcement of FBAR penalties against a Canadian-resident U.S. citizen,” says Max Reed, a Vancouver-based cross-border tax lawyer.

The accounts include two with the CIBC and one with RBC, documents filed with U.S. federal court in Seattle say. The penalty is purely for not reporting accounts, not for taxes owing or penalties for unpaid taxes.

READ: Dual citizens sue feds over FATCA tax deal with U.S.

Failure to file an FBAR comes with penalties. If the failure to file the form is deemed to be wilful, the account holder can be fined US$100,000 or 50 per cent of the value of the account, whichever is greater, per account per year. Non-wilful failures are capped at US$10,000 per account per year.

“The case illustrates the inherent unfairness of the U.S. tax rules,” Reed says. “While those rules are really unfair, they probably aren’t changing any time soon. It’s been this way for a long time.”

Unlike other industrialized countries, the U.S. requires citizens, including dual citizens, to file tax returns no matter where in the world they live.

Selling a house and putting the money in a bank account puts the value of the house into the penalty calculation. And moving that money around between different accounts multiplies it, as each dollar is counted several times.

READ: Meet the Alberta man who went to Tijuana to renounce his U.S. citizenship

Both of these things happened in Pomerantz’s case, he says, making his penalties balloon.

“If you take the same $500,000, and open up a bank account at CIBC, and then say ‘Oh, I’d rather bank with Scotia,’ then I move the same $500,000 – nothing has changed, I haven’t had any income on the $500,000 — and I move it from CIBC to Scotia, and I say, ‘Oh, RBC is going to give me a better deal,’ and I move it to RBC, now it’s a million-and-a-half dollars.,” Pomerantz explains.

Pomerantz prepared his own U.S. tax returns (omitting the FBARs), something he now regrets.

“Don’t file your own taxes,” he says. “Make sure if you’re living in Canada, that you’re hiring a professional. If you don’t cross all your Ts and dot all your Is, they will find some way to screw you.”

“We decline to comment beyond the government’s filings,” said Nicole Mavis, a spokesperson for the U.S. Justice Department.

READ: Unwilling dual citizens face 10-month wait to shed U.S. citizenship in Toronto

Estimates of how many people in Canada have U.S. status vary.

The U.S. State Department puts the total at a million. But in the 2006 census, about 300,000 people in Canada said they were U.S.-born. Of that number, 160,950 said they were dual citizens, 117,425 said they were Canadian citizens only and 137,425 said they’re U.S. citizens only.

Under the Foreign Account Tax Compliance Act, an information-sharing deal, Canadian banks have been identifying U.S.-status customers and reporting their account details to the CRA, which in turn sends them to the IRS. The data lets the IRS know which accounts haven’t been reported on FBARs.

About 300,000 Canadian accounts were reported to the IRS last year.

There’s a limited amount the IRS can do with the flood of account information coming in from all over the world, however. (The U.S. now has similar treaties with 113 countries.)

“The U.S. government has limited resources to throw at this issue,” Reed says. “Litigation is complicated and expensive for both parties. But many people will settle before it goes to litigation — as soon as they’re assessed penalties, they’ll settle.”

“The IRS probably doesn’t have the resources to pursue all non-compliant Americans in Canada, but they can pursue some of them. Some people will get pursued, and because of the stress and associated cost, you don’t want that to be you.”

READ: Unwilling dual citizens face 10-month wait to shed U.S. citizenship in Toronto

On the other hand, the IRS has a limited ability to collect penalties in Canada.

“The CRA has a policy that it will not assist in the collection, at all, of FBAR penalties. Its rationale is that FBAR penalties are not covered by the Canada-U.S. tax treaty.”

So non-compliant Americans in Canada are shielded to an extent, so long as they don’t own U.S. property and don’t plan to cross the border. But Americans here (who are likely to have relatives in the United States) could inherit money there, or the tax treaty could change, Reed says.

In any case, Pomerantz says, he doesn’t have the money to pay the penalty:

“I get paid my Social Security, and I get a small pension from Canada. I don’t have the means to pay that. Having no assets and no income, it’s going to be an interesting challenge for them.”

Published on © 2017 Global News, a division of Corus Entertainment Inc.
Weekly Q&A

Q: What if my Previous Streamline Submission was Incomplete?

A: A false “Streamline” procedures submission could lead to a serious of penalties.  They may include charges under Internal Revenue Code’s section 7206(1) for filing a false document signed under penalty of perjury, under section 7212(a) for tax obstruction, under section 7201 for tax evasion. Each of these penalties are imposed independently and range from fines of $1,000-$100,000 and imprisonment from 1 to 5 years. It’s worth noting that section 7206(1) is not just for false tax returns, but applies to any materially false document signed under penalty of perjury if the filer knew that the document was false when signing it.  False assertion of non-willfulness on documents filed under penalty of perjury is an example of “classic” tax obstruction.

Tax evasion charges could be based on the false assertion as a new act of evasion, renewing the statute of limitations and increasing the number of tax years available for additional charges, even if the statute had otherwise expired.  This applies to both income tax returns and FBARS.

Don’t underestimate the amount of information that the US government has.  Ensure that you select a reputable and experienced cross-border tax accountant who can lead you through the “streamline” process and who can compile your previously omitted returns in the most accurate and complete fashion.

american citizens in canada

Post #6 – How Can HCBT Help

In the previous posts, we outlined:

  • tax compliance and reporting issues that S1 & S2 had not dealt with;
  • how HCBT could help correct prior year problems / reduce penalty exposure through a VDP submission;
  • assist with CofC submissions and the reporting of the property sale;

What we cannot do is eliminate the incremental stress and professional costs of dealing with tax authorities in a time crunch before a pending sale.

What can be learned from this?

There are important triggering life events when every taxpayer should seek appropriate and timely professional advice.  In the cross border context, all moves between countries requires professional advice.  The tax and financial consequences in both the departure and arrival country must be identified in advance.  It is imprudent to assume there are no changes from your current domestic situation or that issues can be reviewed after the move.  Often, compliance or planning issues can only be dealt with properly, before the move.  Although rare, it is conceivable that a tax / financial issue created by a transfer between countries could be sufficiently important, to rethink the move decision.

In a Canadian domestic context, any change in use of any real estate from personal to rental / business use, creates tax consequences, whether or not properties are sold.  Failure to consider these issues in advance could be costly.

HCBT has realized that sharing peoples past tax situations can be a very valuable learning tool to our clients and community. We will continue to publish sanitized client situations in future posts.  In the meantime, if you need or know someone who needs our assistance on cross border or other Canadian / US tax issues please contact us.

Pensions Rentals

Post # 5 / Damage Control

In the last post HCBT had recommended S1 & S2 access the Voluntary Disclosure Program [VDP] to possibly reduce the penalty component of their $20,000 tax problem.  However, timing was an issue.

CRA public information states that most Certificate of Compliance [CofC] requests will be processed in 30 days.  The 30-day target presumes no unresolved prior year issues.  After receiving the offer, consulting with the lawyer / HCBT less than 30 days remained before closing date.  The CofCs must be presented to the purchaser’s lawyer on closing to avoid withholding from the sale proceeds.

The VDP submission to correct the 2013 to 2015 deficiencies must be completed and submitted before the CofC request.  S1 & S2 had to scramble at the last minute to assemble old financial information from 2013 to 2016 so the proper reporting on departure and rental reporting can be completed/submitted.  Even with professional help and utilization of the VDP there was a real risk the CofC review would not be completed on time to prevent withholding of sale proceeds.  If so, the process could be extended for several months, delaying the tax refund.

S1 & S2 also needed to understand why the sale of their family home was not tax free, which is what most of the Canadian tax paying public thinks.  The theory is that 1 family unit [2 spouses plus children under 18] can own 1 family home / principal residence without paying tax on any gains realized on that home.  The tax mechanics to accomplish this are based on a formula

Exempt Gain =   Total Gain Realized   x     Principal Residence Years / Total years of ownership

Principal residence years are the years the taxpayer used the property as a family home plus 1 bonus year to allow for mid-year transactions.  In most cases the years of usage and the years of ownership are the same, so 100% of the gain is exempt.  However, in Expat or rental conversion situations a problem results.  Any year after ceasing to be a resident of Canada does not count in the top half of the fraction.  S1 & S2 had a change of use to a rental property just after departure.  Rental years do not count in the top half of the fraction.  The mechanics of the formula are such that the sheltered gain percentage gets smaller with each passing year after departure from Canada.

US Implications:  The use of the family home as a rental property and subsequent sale will also have US tax consequences, which are not discussed as part of this series of posts.

 If you want to know how HCBT can help, see post # 6.