The Streamlined Foreign Offshore Procedure – a way to bring yourself up to date with the IRS
If you are a U.S. citizen residing in Canada, you are obligated to file a U.S. tax return every year. This is true even if you were born in the U.S. but left many years ago and have not set foot in the country since. The IRS (Internal Revenue Service), the U.S. tax collection agency, has a long arm and the risk of it catching you increases with time, especially since the implementation of information exchange agreements between Canada and the U.S.
If you have not filed a U.S. tax return for many years, you may face a stiff penalty imposed by the U.S. government. But now there is a temporary program that can bring you up to date and avoid penalties. Called the Streamlined Foreign Offshore Procedure, it lets you file your tax filing for only the last 3 tax returns and be considered up to date for all previous years.
Of course, you must respect certain conditions for this streamlined filing compliance procedure. First, your failure to file must not have been intentional. You are also required to file FBAR forms for the past 6 years. Other conditions also apply, so be sure to consult an advisor to make sure you are eligible for this program.
As the program is temporary, you are advised to act quickly. The program may be suspended soon and you cannot afford to ignore your U.S. tax obligations much longer. Make an appointment for a consultation with your tax advisor without delay.
Please note that this article has covered only a few aspects of this issue and must not be considered tax advice. To receive tax advice adapted to your particular situation, we recommend that you consult a specialist who thoroughly understands both American taxation and Canadian taxation, as results in one system impact the other.
Nicolas Godbout, Tax master and Financial Planner
See our other American tax articles