Topic: US Tax Tips

New IRS program: Relief Procedures for Certain Former Citizens

As was discussed in our last U.S. Tax Tip, the IRS had announced a number of new compliance programs emanating from their Large Business and International (LB&I) unit.  We also had previously reported that one of the IRS compliance programs, the Offshore Voluntary Disclosure Program terminated on September 28, 2018.  The Streamlined Compliance Filings Procedures Program (both foreign and domestic), however, is still in effect.  It would appear that as time goes on and more taxpayers have become compliant that the value of these programs to the IRS diminishes. At some point in time, the Streamlined Compliance Filings Procedures will also come to an end.

On September 6th, 2019, however, the IRS announced new procedures for certain persons who have relinquished, or intend to relinquish, their U.S. citizenship and who wish to bring their U.S. tax filings into compliance. 

Under the U.S. Internal Revenue Code, individuals who are “covered expatriates” are treated as

  1. having disposed of all worldwide assets on the day before their expatriation date, are required to pay a mark-to-market exit tax on the gain (subject to an exclusion amount) resulting from the deemed disposition of their worldwide assets, and
  2. are subject to additional tax consequences with respect to certain deferred compensation items and trust distributions.

 In general, an individual will be classified as a “covered expatriate” if:

  1. The individual has an average annual U.S. net income tax liability (after any applicable foreign tax credits) of the five years preceding the year of expatriation that exceeds a specified amount adjusted for inflation (U.S. $168,000 for 2019) (“average income tax liability test”),
  2. The individual has a net worth of $2 million or more as of the expatriation date (“net worth test”). Note that this U.S. $ 2 million threshold is NOT adjusted for inflation, or
  3. The individual cannot certify, under penalties of perjury, on Form 8854, “Initial and Annual Expatriation Statement, that the individual is compliant with all Federal tax obligations for the five tax years preceding the tax year that includes the expatriation date (“certification test”). 

Relief Procedures

Under the Relief Procedures for Certain Former Citizens (“these procedures”), the IRS is providing an alternative means for satisfying the tax compliance certification process for citizens who expatriate after March 18, 2010.

These procedures are only available to U.S. citizens with a net worth of less than $2 million (at the time of expatriation and at the time of making their submission under these procedures), and an aggregate tax liability of $25,000 or less for the taxable year of expatriation and the five prior years. 

In order to become compliant, the former U.S. citizen must submit the following documents:

  1. Certificate of Loss of Nationality (CLN) of the United States, or copy of court order cancelling a naturalized citizen’s certification of naturalization
  2. Identification: Copy of (a) valid passport OR (b) birth certificate and government issued identification
  3. U.S. tax and information returns for the year of expatriation, including (but not limited to):
    1. Dual-status return including Form 1040NR with all required information returns;
    2. Form 8854, “Initial and Annual Expatriation Statement”;
    3. Form 1040 attached as an information return reporting worldwide income up to date of expatriation; and
    4. All other required information returns, including but not limited to Form 8938, “Statement of Specified Foreign Financial Assets”
  4. U.S. Form 1040 for the five tax years preceding the year of expatriation, with all required information returns

While these procedures are certainly good news for many taxpayers, they will not provide any relief for high net worth taxpayers.  For example, residents of Toronto or Vancouver may find that, when their Canadian principal residence is included (in determining their net worth), that they may exceed the US $ 2 million threshold.  As such, they would not qualify for relief under this program.

Individuals who qualify under this program will not be “covered expatriates”.  As such, the “normal” treatment, discussed above will not apply (there is no deemed disposition, etc.).  In addition they will not be liable for any unpaid taxes and penalties for these years or any previous years.  As such, it would appear that the IRS is providing a level of tax forgiveness.

These procedures may only be used by taxpayers whose failure to file required tax returns (including income tax returns, applicable gift tax returns, information returns (including Form 8938, Statement of Foreign Financial Assets), and Report of Foreign Bank and Financial Accounts (FinCEN Form 114, formerly Form TD F 90-22.1)) and pay taxes and penalties for the years at issue was due to non-willful conduct.

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.

Similar to most of the other IRS programs, there is no announced termination date for this new program.  It would be hard to imagine, however, that the program would be in existence for an extended period (just our opinion).  Individuals who had previously filed as a nonresident alien, under the belief that they were not U.S. citizens, may use this program to correct their prior filings.

One perhaps frustrating point is that a qualified taxpayer must still obtain a U.S. social security number (SSN) in order to file U.S. returns (assuming they do not have one).  Obtaining a SSN can, in many instances, take a significant amount of time to obtain as the U.S. Social Security Administration requires significant documentation before a SSN can be issued.  One would think that taxpayers who are going to renounce would be able to obtain an IRS Individual Taxpayer Identification Number (ITIN) instead.  It seems a waste of time and energy to obtain a SSN when the sole purpose is then to renounce their U.S. citizenship!

It should also be emphasized that, in general, there are two components to renunciation.  First is dealing with the U.S. Department of State.  A person can only renounce by making a formal renunciation of nationality before a U.S. diplomatic or consular officer.  This requires scheduling and attending an “exit” interview.  Currently there is a fee of U.S. $2,350 for this interview. The U.S. Department of State will subsequently issue the Loss of Nationality Certificate (LNC).

The second component is dealing with the U.S. Internal Revenue Service and being compliant with your U.S. tax filings.  This new procedure can provide assistance with qualifying individuals in fulfilling this component.

Who we are

Cadesky U.S. Tax Ltd. is a full service advisory and compliance firm.  We monitor U.S. tax news that may be of interest to our readers and share our thoughts in U.S. Tax Tips.   

If you require our assistance please do not hesitate to reach out to us.

Expanded IRS Compliance Programs

In a prior U.S. Tax Tip, (July 2018), we had outlined 5 new, at the time, compliance programs that the IRS Large Business and International division (LB&I) introduced.   On July 19, 2019 the IRS announced 6 new compliance programs, bringing the total to 59.  These new programs are

  • S Corporations Built in Gains Tax
  • Post OVDP Compliance
  • Expatriation
  • High Income Non-filer
  • S. Territories – Erroneous Refundable Credits
  • Section 457A Deferred Compensation Attributable to Services Performed Before January 1, 2009.

Two of these programs should be of interest to U.S. taxpayers who live outside of the United States.  Those two, being Post OVDP Compliance and Expatriation

Post OVDP Compliance

The Offshore Voluntary Disclosure Program (OVDP) was first introduced in March, 2009 and ended on October 15, 2009.  Additional programs were subsequently introduced or amended in February 2011, June 2012 and June 2014. The Offshore Voluntary Disclosure Program officially ended on September 28, 2018, just under one year ago.

The Offshore Voluntary Disclosure Program (OVDP) was a voluntary disclosure program specifically designed for taxpayers with exposure to potential criminal liability and/or substantial civil penalties due to a willful failure to report foreign financial assets and pay all tax due in respect of those assets.  OVDP was designed to provide to taxpayers with such exposure (1) protection from criminal liability and (2) terms for resolving their civil tax and penalty obligations.

In IR-2018-52 (March 13, 2018) the IRS estimated that more than 56,000 taxpayers had used one of the programs and that these taxpayers had paid a total of US $11.1 billion in back taxes, interest and penalties.  The IRS Criminal Investigation has indicated some 1,545 taxpayers on criminal violations related to international activities, of which 671 taxpayers were indited on international criminal tax violations.

While no one can argue that US $11.1 billion is not a lot of money, it should be noted that just before the enactment of the Foreign Account Tax Compliance Act (on March 18, 2010) Senator Carl Levin (D-MI) stated “Right now, thousands of U.S. dodgers conceal billions in assets within secrecy-shrouded foreign banks dodging taxes and penalizing those of us who pay the taxes we owe. The Permanent Subcommittee of Investigations…estimated that these tax-dodging schemes cost the Federal Treasury $100 billion a year.” Economist Gabriel Zucman estimated the annual tax loss to be closer to US $36 billion.  As such, over the, almost, 10 years that the various OVDPs were in place, it would have been reasonable to expect that the US Treasury would have realized between $360 billion to US $ 1 trillion in taxes, let alone interest and penalties.  Whether you would consider the various OVDPs to be successful, however, is another discussion.

Under this new campaign, the IRS will address tax noncompliance related to former OVDP taxpayers’ failure to remain compliant with their foreign income and asset reporting requirements (including, for example, Form 8938 and FinCEN 114).  Taxpayers who had filed under the OVDP or the still ongoing Streamline Compliance Filing Procedures need to be aware that they must continue to timely and accurately file their U.S. income tax and information returns.  They can no longer plead innocence or ignorance of the law.

The IRS will address this (potential) non-compliance by performing examinations and through “soft” letters.

Expatriation

With the current political environment in the U.S., the inability to tax efficiently own some foreign investments and the increased compliance costs, many U.S. citizens and long-term residents (a long term resident being defined as someone who was a lawful permanent resident, or Green Card holder, for at least 8 out of the last 15 taxable years) have made the decision to either renounce their citizenship or surrender their permanent resident status.  The Quarterly Publication of Individuals Who Have Chosen to Expatriate reported 5,132 names for 2017, 3,974 names in 2018 and 1,627 names for the first six months of 2019.

There are two paths to renunciation – what is done under immigration law and what is done under tax law.  The Internal Revenue Code clearly defines at what point in time an individual ceases to be a United States person for U.S tax purpose and what their filing obligations are.

The IRS is concerned that taxpayers, who expatriated after June 17, 2008, may have not met all of their filing requirements or tax obligations.  The current expatriation provisions became effective June 17, 2008.  The current rules require a “covered expatriate” to, among other provisions, include in their last U.S. personal income tax return, capital gains arising from a deemed sale of all property on the day before the expatriation date. (There being, however, a threshold of which gains, under the threshold, may be excluded.  For 2019, that threshold is US $725,000.)

The IRS will address noncompliance through a variety of treatment streams, including outreach, soft letters and examinations.  Affected taxpayers may wish to consider obtaining IRS transcripts to verify that prior filings had been received and processed by the IRS (if the required returns had indeed been filed).   When you renounce, your name should also appear in a Federal Register – Quarterly Publication of Individuals Who Have Chosen to Expatriate (though it cannot be guaranteed that this register is 100% accurate).  Again, affected taxpayers may want to review the Register to see if their name is listed.  This requirement, to list names, was brought in under HIPAA (the Health Insurance Portability and Accountability Act of 1996 – P.L. 104-191) as an amendment by Sam Gibbons (D-FL) as a means to “shame or embarrass” people who give up U.S. citizenship for tax reasons.

Who we are

Cadesky U.S. Tax Ltd. is a full service advisory and compliance firm.  We monitor U.S. tax news that may be of interest to our readers and share our thoughts in U.S. Tax Tips.   

If you require our assistance please do not hesitate to reach out to us.

Becoming a U.S. Tax Resident

Here at Cadesky U.S. Tax, we routinely receive enquiries from clients who are either considering moving to the U.S. or who are spending a significant amount of time in the U.S.  They want to know on what basis they will be taxed.  One significant issue that must first be addressed is to determine their residency status for U.S. tax purposes.  It is common knowledge that a U.S. citizen is subject to U.S. taxation and filing requirements regardless of where they live in the world.  The question then becomes, for a non-U.S. citizen – when do they become a U.S. resident?

There are, in general, three ways that a non-U.S. citizen can become a resident alien, a U.S. tax resident, for U.S. tax purposes: (i) being lawfully admitted for permanent residence (aka obtaining a green card); (ii) meeting the conditions of the substantial presence test; or (iii) making the first year election.  This U.S. Tax Tip will look at the substantial presence test.

The rules are contained in paragraph 7701(b)(3) of the Internal Revenue Code.  It is a relatively straightforward days counting test, though there are some statutory modifications.   It does not depend on an individual’s unique “facts and circumstances”. It operates on a three-year rolling average whereby, under the test, if the individual exceeds 182 days the individual will be considered to be a U.S. tax resident from the first day of physical presence in the United States. 

What constitutes a day?

Any part of a day that an individual is physically present in the U.S. counts as a day (subject to below). 

If, for example, you fly into La Guardia airport, in New York City, at 10:30 PM that counts as 1 day of physical presence though you may have only actually been in the U.S. for 1 ½ hours.  As such, it has been our experience that many individuals do not count their travel days when computing their total U.S. days.  This is clearly wrong and doing so may understate their actual physical presence.

However, in the year that an individual becomes or ceases to be a U.S resident not more than 10 days of physical presence may be excluded when determining the residency start or end date.  For these days to be excluded the individual must have a closer connection with a foreign country. 

Assume an individual was working in the U.S. on an L-1 visa.  He was physically present in the U.S. from January 1 to June 30. He departed the U.S. on June 30th.  He then returned for Christmas arriving on December 20th and leaving on December 27th.  His time in December was 8 days.  These 8 days may be excluded.  As such the individual ceased U.S. residency, for U.S. tax purposes, on June 30th.  If, however, he had arrived on December 10th and left on the 27th, he would then have 18 days of subsequent U.S. physical presence.  Since this exceeds 10 days, they cannot be excluded.  Now, the individual ceased U.S. residency on December 27th not June 30th.  As such, his worldwide income, from July 1st to December 9th, may now be subject to U.S. taxation.  Reliance on an Income Tax Treaty may be required.

In determining residence for state income tax purposes, many states mirror or follow the federal rules. As such, there may be state implications as well as U.S. federal implications.  Many states, such as New York, are aggressively targeting non-residents to determine if the individual, in fact, has become a state resident for income tax purposes.  This could have the impact of subjecting the individual’s worldwide income to state taxation.

Excluded days

Certain days of physical presence, however, are excluded.  These days include days in which the individual can be classified as an “exempt individual”, days where such individual was unable to leave the United States on such day because of a medical condition which arose while such individual was present in the United States or days which are statutorily excluded.

An “exempt individual” includes:

  1. a foreign government-related individual;
  2. a teacher or trainee being an individual who is temporarily present in the United States under subparagraph (J) or (Q) of section 101(15) of the Immigration and Nationality Act (other than as a student), and who substantially complies with the requirements for being so present;
  3. a student – an individual who is temporarily present in the United States— (I) under subparagraph (F) or (M) of section 101(15) of the Immigration and Nationality Act, or (II) as a student under subparagraph (J) or (Q) of such section 101(15), and who substantially complies with the requirements for being so present.; or
  4. a professional athlete who is temporarily in the United States to compete in certain sporting events.

Statutorily excluded days include days for commuters, transit between two foreign points and crew members that are temporarily present in the United States.

  1. If an individual regularly commutes to employment (or self-employment) in the United States from a place of residence in Canada or Mexico, such individual shall not be treated as present in the United States on any day during which he so commutes.
  2. Transit between two foreign points – If an individual, who is in transit between 2 points outside the United States, is physically present in the United States for less than 24 hours, such individual shall not be treated as present in the United States on any day during such transit.  For example, if the individual takes a flight from Toronto to Newark, NJ and then later that day takes a flight from Newark, NJ to Manchester, U.K. – that “day” of physical presence in Newark is not a considered a day under the substantial presence test.
  3. Crew members temporarily present – An individual who is temporarily present in the United States on any day as a regular member of the crew of a foreign vessel engaged in transportation between the United States and a foreign country or a possession of the United States shall not be treated as present in the United States on such day unless such individual otherwise engages in any trade or business in the United States on such day.

Computing the days

Step 1

First, the individual must have at least 31 days of U.S. physical presence in the current year.  This provision provides a de minimis number of days otherwise it would be possible that, under the formula, that an individual would still be considered a resident, for the current year, based on the number of days in the prior year(s) alone.  If the taxpayer does not have at least 31 days of presence then he would not be a U.S. tax resident for the current year.  It does not matter how many days of physical presence he may have had in the prior years.

Step 2

Take the number of days in the current year plus the number of days in the first prior year times 1/3 plus the number of days in the second prior year times 1/6. Any fractional days resulting from the above calculations will not be rounded to the nearest whole number.  As such the formula is

Total number of days = Current year + (First prior year x 1/3) + (Second prior year x 1/6)

For example, let’s assume that Bob, an alien individual, is present in the United States for 122 days in the current year. He was present in the United States for 122 days in the first preceding calendar year and for 122 days in the second preceding calendar year.

In determining Bob’s status for the current year, we count all 122 days in the United States in the current year plus 1/3 of the 122 days in the United States in the first preceding calendar year (40 2/3 days) and 1/6 of the 122 days in the United States during the second preceding calendar year (20 1/3 days).

The total of 122 + 40 2/3 + 20 1/3 equals 183 days. Bob meets the substantial presence test and is a resident alien for the current year.

What are my options?

Assuming that the individual has become a U.S. resident under the substantial presence test AND that he remains a factual resident of another country (or countries), he may not wish to be treated as a U.S. resident for U.S. tax purposes.

Closer Connection

An individual shall not be treated as meeting the substantial presence test with respect to any current year if—

  1. such individual is present in the United States on fewer than 183 days during the current year, and
  2. it is established that for the current year such individual has a tax home in a foreign country and has a closer connection to such foreign country than to the United States.

Individuals who have meet the substantial presence test and are making the closer connection argument need to file Form 8840, “Closer Connection Exception Statement for Aliens” with the IRS by the appropriate due date.

Reliance on tax treaty.

If the individual has exceeded 182 days during the current year, the closer connection exception will not apply.  The only option would then be to rely on the residency tie-breaker rules contained in the relevant Income Tax Convention.  The issue here is that reliance on a tax treaty does NOT alleviate the individual of any potential filing obligations as a U.S. resident.  There are substantial penalties for not filing any required information returns.

These individuals would file Form 1040NR, “U.S. Nonresident Alien Income Tax Return” along with Form 8833, “Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b)” disclosing their reliance on the treaty residency tie-breaker rules.

Individuals MUST monitor their days of U.S. physical presence in order to minimize the risk of being considered a U.S. resident.

How will the U.S. government know how many days I was in the U.S?

A foreign national or alien entering the U.S. is generally required to present a passport.  Depending on the country of which they are resident, a valid visa issued by a U.S. Consular Official may also be required.

The Visa Waiver Program allows foreign nationals from certain countries to be admitted to the U.S. under limited conditions and for a limited time without obtaining a visa. The foreign national must arrive on an approved carrier (if coming by air or sea), staying no more than 90 days, for pleasure/medical purposes/business, and be able to prove they are not inadmissible. The foreign national, however, is still required to have a passport.

When you are interviewed by the U.S. border official, they will scan a copy of your passport into their computer system.  There is currently no requirement for your passport to be scanned when leaving the U.S.   If you are, however, entering Canada, the Canada Border Service Agency (CBSA) will scan your passport and that information is shared with the United States. 

Interested readers should get a copy of their passport and type https://i94.cbp.dhs.gov into their web browser.  This will bring the U.S. Customs and Border Protection’s “I-94 Official Website” up.  Click on “View Travel History” and enter your information.   You may be surprised on what information is there. 

Though not perfect and not a “legal” source of information the site does disclose the dates of entry and in many cases, the date of departure.  You can run but you can no longer hide!  It would not surprise us in that, in the future, this information can be shared with the IRS.

Cadesky U.S. Tax is a full service advisory and compliance firm.  We monitor U.S. tax news that may be of interest to our readers and share our thoughts in U.S. Tax Tips.    If you require our assistance please do not hesitate to reach out to us.

Revised Form 5471

The enactment of the 2017 Tax Cuts and Jobs Act (TCJA)) brought significant changes to the international tax world for U.S. taxpayer including, among other provisions, an expanded definition of a “United States shareholder”, the repatriation tax of IRC §965 and the global low tax intangible income (GILTI) under IRC §951A.  We have discussed these provisions in earlier Tax Tips.

As many non-resident U.S. taxpayers are now filing their 2018 U.S. personal tax returns (due October 15, 2018 on extension) many are seeing, for the first time, new Form 5471, “Information Return of U.S. Persons With Respect to Certain Foreign Corporations”.  What becomes clear, once more, is that the U.S. Congress did not consider the impact on United States citizens living abroad.  The new form is clearly aimed at the large U.S. multi-national enterprises (MNE) who have both the expertise and resources to accurately complete these forms.

One IRS estimate states that it takes, on average, 38 hours to prepare Form 5471, 82.5 hours to do the appropriate book and record keeping and 16 hours to learn about the Form.  Someone who has little or no experience with U.S. international compliance will spend significantly more time.  If the financial statements have been prepared by a professional accountant we are still looking at an average estimate of 38 hours just to prepare the Form!  Using an estimated hourly rate of $200 per hour (which is probably on the lower side given the expertise that is needed) we are looking at a potential fee of approximately $7,500 to complete each Form 5471.  One thing is for certain, compliance fees will be going up.  Increasing compliance costs are a factor that many U.S. citizens, abroad, are considering when determining whether they want to renounce their U.S. citizenship.

The IRS may impose a penalty of US $10,000 on a late filed or INCOMPLETE form.  As such taxpayers cannot ignore this form or take a light hearted approach to complete it.  In the past the IRS would not have, automatically, imposed a late filing penalty on individual United States shareholders.   This, however, may be changing.  The Large Business and International (LB&I) division of the IRS has a number of programs in place (https://www.irs.gov/businesses/full-list-of-lb-large-business-and-international-campaigns) and foreign compliance, in general, is on their target list.

Some significant changes include

  1. A new classification for a Category 1 filer.  There are now 5 (again) classifications of filers.
  2. Schedule B, Part II is new
  3. Schedule C, line 8a and 8b are new.  These lines report foreign currency transaction gain or loss
  4. Schedules E and H are now separate schedules.
  5. Schedule E has been greatly expanded.
  6. An expanded Schedule G – Other information – may additional questions have been included.
  7. Schedule I-1 is new.  This schedule is used to report information with respect to GILTI
  8. An expanded Schedule J
  9. Schedule M has new lines, and
  10. New Schedule P

Expanded schedules

Schedules E, H, I-1, J and P must be completed separately for each applicable category of income.  For example schedule E-1 has 13 different columns for the tracking of taxes, 9 columns alone for “Taxes related to previously taxed E&P”.   The same level of detail is required for Schedule H, “Current Earnings and Profits”, Schedule J, “Accumulated Earnings and Profits (E&P) of Controlled Foreign Corporation” and Schedule P, “Previously Taxed Earnings and Profits of U.S. Shareholder of Certain Foreign Corporations”.

Schedule I-1, “Information for Global Intangible Low-Taxed Income” is almost a duplicate of new Form 8992, “U.S. Shareholder Calculation of Global Intangible Low-Taxed Income”.

What is abundantly clear is that the level of compliance complexity has dramatically increased.  Smaller, less sophisticated taxpayers are going to have a difficult time complying or are going to have to incur additional compliance costs.

Congress and the IRS really need to consider the impacts on taxpayers other than the Apples, Starbucks and Amazons of this world.

Cadesky U.S. Tax is a full service advisory and compliance firm.  We monitor U.S. tax news that may be of interest to our readers and share our thoughts in U.S. Tax Tips.    If you require our assistance please do not hesitate to reach out to us.

GILTI – Partial relief may be coming

We have described in past US Tax Tips the recently enacted, Global Intangible Low Taxed Income (GILTI) provisions and the potential impacts on United States persons in Canada who own enough shares in Canadian corporations such that those Canadian corporations would be a controlled foreign corporations (CFC) for U.S. tax purposes.

GILTI is treated as a new form of subpart F income meaning that the United States shareholder must include their pro-rata share of GILTI on their U.S. income tax return even though it may not be taxable personally in Canada.   Even worse, where the United States shareholder is a natural person, there is no credit for the underlying corporate tax paid by the Canadian corporation. 

GILTI is also subject to being included in its own foreign tax credit basket.  As such the inclusion of GILTI can result in an actual tax liability for United States shareholders.  An election, under IRC §962, may be made by the taxpayer to address the potential double tax issue. 

Under this election, a United States shareholder, who is an individual, can elect that certain income of the Canadian corporation, be taxed as if the shareholder was a United States corporation as opposed to an individual. This allows the corporate income to be (i) taxed at the U.S. corporate rate of 21% (instead of at the individual’s marginal tax rate which may be as high as 37%) and (ii) by doing so the underlying actual corporate taxes are eligible to be claimed as a foreign tax credit.  If the IRC §962 election is being made with respect to GILTI, however, the eligible foreign taxes are reduced by 20% in computing the foreign tax credit.

Other potential relief, however, appears to be on its way.

In determining what income is subject to the GILTI provisions, the corporation’s gross income is reduced for certain items of income that are already subject to U.S. tax under other provisions of the Internal Revenue Code.  Such exceptions include U.S.-source effectively connected income, passive income subject to the subpart F inclusion provisions and other passive investment income that would be subpart F income except for the high tax kick out provision.  In general, foreign source active business income would be caught under the GILTI provisions.

On June 14th, 2019 the U.S. Treasury and the IRS released Notice 2019-12436 entitled “Guidance under Section 958 (Rules for Determining Stock Ownership) and Section 951A (Global Intangible Low-Taxed Income).”

What is being proposed is a new exception in determining what gross income would be classified as gross tested income (GILTI).   The CFC’s controlling shareholder(s) would make an election to exclude, from gross tested income, gross income that is subject to foreign tax at an effective rate that is greater than 90% of the maximum U.S. corporate rate.  The maximum U.S. corporate rate is currently 21% so the threshold would be 18.9% (21% x 90%).  If the Canadian effective tax rate is in excess of 18.9% then that income will not be subject to a GILTI inclusion on the U.S. return.

Canadian corporate tax rates vary depending on whether the corporation is a CCPC or not.  If the corporation is not a CCPC (or if a CCPC the active business income is well above the Small Business Deduction (“SBD”) threshold such the effective tax rate on Active Business Income (“ABI”) exceeds 18.9%) the 2019 general corporate tax rate varies from a low of 26.5% (Ontario and the Northwest Territories) to a high of 31% (Nova Scotia and Prince Edward Island).  The lowest general corporate rate of 26.5% is in excess of 18.9% so any ABI subject to these rates would be excluded from GILTI under these provisions.

This particular item of relief, however, would not assist CCPCs which take advantage of Small Business Deduction.  The 2019 small business rates vary from 9% (Manitoba) to 15% (Quebec).   These rates, by themselves, are below the current threshold of 18.9%.

For CCPCs, the shareholders may consider making the IRC §962 election. The IRS, however, had previously ruled that a United States shareholder, who is an individual, may claim the 50% deduction, under IRC §250, for any GILTI or Foreign-Derived Intangible Income (FDII) when an IRC §962 election is being made.  As such, the effective U.S. corporate tax rate, on the GILT inclusion would 10.5% (1/2 of 21%).   80% of eligible foreign taxes paid may be claimed as a foreign tax credit against the GILTI U.S. tax.   For a CCPC in Manitoba 80% of 9% equals 7.2%. Using this example, there would U.S. tax of 3.3% (10.5% – 7.2%) as the CCPC has not paid enough Canadian corporate tax to eliminate the U.S. tax.  As such, small Canadian business may still be subject to a small level of double taxation under GILTI.

United States persons who are Canadian residents, generally, did not establish their Canadian corporations to defer or eliminate U.S. tax.  They did so, because they live and work in Canada, invest in Canada, they plan and conduct their affairs as Canadians, which they are.

In our opinion, many provisions of the TCJA failed to address how these changes would impact U.S. persons who live abroad.  These individuals are simply not on the U.S. Congress’ radar.

Canada applies a de minimis threshold in regard to many of its foreign reporting requirements.  For example, a T106, “Information Return of Non-Arm’s Length Transactions with Non-Residents”, is not required to be filed unless the reportable transactions exceed Cdn $1,000,000.

The U.S. could easily include such a de minimis threshold.  There could even be recapture provisions to clawback the de minimis threshold for larger taxpayers (those who are the real targets of these provisions) such that Treasury does not lose any tax revenue to which they are entitled.  Such a provision would eliminate a significant number of foreign small businesses from these far reaching and, frankly, intrusive provisions.  Something to consider (in our opinion anyway).

Obviously the GILTI provisions rules are extremely complex.  Cadesky U.S. Tax Ltd. is a full service firm providing U.S. consulting, planning and compliance services.  We monitor U.S. tax news that may be of interest to our readers and share our thoughts in U.S. Tax Tips.  If you require our assistance please do not hesitate to reach out to us.

Extending a U.S. Tax Return’s Due Date

One distinct aspect of the U.S. tax system is the ability for a taxpayer to extend the due date of a tax return. This allows the taxpayer additional time to complete and file an income tax return without being assessed a late filing penalty.  Late filing penalties are assessed at the rate of 5% per month up to a maximum of 25%.

In most cases a tax return due date can be automatically extended by up to six months.  All that is required is the filing of the proper extension form.  No explanation from the taxpayer is required and the IRS cannot deny a properly filed extension.  However, the timely filing of the form is crucial in order for the extension to be valid. 

It’s important to realize that extending the filing due date of a tax return does not extend the tax payment due date.  Taxpayers who do not pay at least 90% of the ultimate taxes due by the original due date will be assessed a late payment penalty.  The penalty is imposed at a rate of 1/2% per month until paid.  Interest will accrue, on both the taxes due and any penalties, from the original payment due date until payment is made.  The rate of interest is equal to the short-term applicable federal rate (AFR) plus 3%.

If the due date falls on a weekend or a statutory holiday, the due date is extended until the next business day.

Individual Tax Returns

An individual taxpayer can obtain an automatic six-month extension of time to file by filing Form 4868, “Application for Automatic Extension of Time to File U.S. Individual Income Tax Return,” on or before the original due date of the return.  No signature is required and the form can be filed electronically or mailed to the appropriate IRS office.  A proper estimate of the tax due for the year must be made, but full payment is not required. 

A U.S. citizen or resident who is “out of the country” on the regular due date of a return is allowed an automatic two month extension to file without filing Form 4868.  However, if additional time is required beyond this extended due date, the taxpayer can file Form 4868 and will be allowed an additional four months to file the return. 

U.S. citizens or residents who do not reside in the U.S. may also request an additional 2 month extension.  This extension, however, is not automatic and can be denied by the IRS.

Corporations

A corporation generally may obtain an automatic six-month extension of time for filing its income tax return by filing Form 7004, “Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns,” provided that the application is timely filed, properly signed, and a remittance is made of the amount of the tax properly estimated to be due.  A seven-month extension is available for returns of C corporations with tax years ending June 30.  

Partnerships, S Corporations, and Trusts

An automatic extension of time for a partnership, S corporation or trust to file an income tax return can be obtained by filing Form 7004, “Application for Automatic Extension of Time To File Certain Business Income Tax, Information and Other Returns.” The length of the automatic extension depends upon the type of return.  For partnerships and S corporations, an automatic six month extension is available. For certain estate and trust returns, an automatic 5½ month extension is available.

A summary of U.S. tax return regular due dates and extended due dates is below. 

Individuals

Type of FilerFormRegularDue DateExtendedDue Date
U.S. citizens and residentsForm 4868April 15October 15
U.S. non-resident aliens with U.S. employment incomeForm 4868April 15October 15
U.S. non-resident aliens without U.S. employment incomeForm 4868June 15December 15

U.S. citizens and residents who reside outside of the United States receive an automatic two-month extension of time to file to June 15.  No filing is required for this automatic extension.

Business Entities

Type of Filer Form Regular Due Date Extended Due Date
C Corporations Form 7004 15th day of the 4th month after the end of the tax year 15th day of the 10th month after the end of the tax year
Partnerships Form 7004 15th day of the 3rd month after the end of the tax year 15th day of the 6th month after the end of the tax year
Limited Liability Corporations Form 7004 15th day of the 3rd month after the end of the tax year 15th day of the 6th month after the end of the tax year
S Corporations Form 7004 15th day of the 3rd month after the end of the tax year 15th day of the 6th month after the end of the tax year

Trusts

Type of Filer Form Regular Due Date Extended Due Date
U.S. Resident  Trust Form 7004 15th day of the 4th month after the end of the tax year First day of the 10th month after the end of the tax year
U.S. Nonresident Trust Form 4868 15th day of the 6th  month after the end of the tax year 15th day of the 12th month after the end of the tax year
Foreign Trust with a U.S. Owner Form 7004 15th day of the 3rd month after the end of the tax year 15th day of the 6th month after the end of the tax year

State Income Tax Extensions

Those U.S. states that impose an income tax also have a provision to extend a tax return’s due date.  However, keep in mind that the regular due date and extended due date for a state tax return may be different than the federal dates.  Also, each state has a different filing requirement for an extension — some states will recognize a federal extension form while other states have their own forms.  It is important to review an individual state’s extension filing requirement.  

U.S. Citizens and Sale of Foreign Principal Residence

For most individuals, their principal residence is their single most important asset.  In Canada, when an individual sells their principal residence the gain on the sale is exempt from capital gains tax in most instances. A taxpayer must designate the property as their principal residence when they file their Canadian personal income tax return. This is one of the biggest gifts to individuals in the Income Tax Act.

Canadian residents who are also U.S. persons will also be subject to the U.S. rules surrounding the sale of a principal residence.  These rules are quite different and for many taxpayers, given the increase in value of Canadian real estate, may give rise to an unpleasant surprise.  For U.S. purposes, only the first $250,000 USD of gain on the sale of a principal residence is exempt from capital gains tax.  For a married couple this exemption is $500,000 USD, but only if both taxpayers are U.S. persons.  Amounts above the exemption will be subject to capital gains tax. 

To calculate the gain for U.S. purposes, the proceeds from the sale are translated into U.S. dollars using the spot rate on the date of sale and the cost base is translated into U.S. dollars using the spot rate on the date of purchase.  Using this method, any increase or decrease in the value of the U.S. dollar versus the Canadian dollar is also included with the sale.

In addition to the capital gains tax, U.S. persons who hold a Canadian mortgage on their principal residence may also be subject to tax when that mortgage is discharged.  This tax comes into play when the value of the Canadian dollar has decreased against the U.S. dollar since the mortgage was obtained.  This tax is best explained with an example:

Let’s take the example of Sam, who is a U.S. citizen resident in Canada.  Sam purchased his principal residence in Canada and obtained a mortgage of $100,000 CAD when the Canadian dollar and U.S. dollar were at par (1 CAD = 1 USD).  Therefore his mortgage was worth $100,000 CAD and $100,000 USD.  He subsequently sold the property.  At the time of disposition (and assuming he did not pay off any of the mortgage principal) the value of the Canadian dollar had decreased to 75 cents U.S. (1 CAD = .75 USD).  At the time of discharge, his $100,000 CAD mortgage is now worth $75,000 USD.  Because it takes fewer U.S. dollars to pay back his original obligation, the U.S. views this $25,000 foreign exchange difference as a taxable gain to Sam for U.S. income tax purposes.

This, of course, is a simplified example to illustrate the concept of a Foreign Mortgage Gain.  The example does not take into account the principal on the mortgage that has been repaid by Sam, which is considered in an actual Foreign Mortgage Gain calculation.

The Foreign Mortgage Gain on a principal residence is considered foreign-source ordinary income and can be offset with foreign tax credits.  The gain is allocated to the general foreign income basket, so if a taxpayer has sufficient accumulated excess foreign tax credits in this basket to offset the Foreign Mortgage Gain then no tax may be payable.  A Foreign Mortgage Loss on a principal residence is considered a personal loss and is disallowed. 

While technically a Foreign Mortgage Gain or Loss should be calculated on each mortgage payment made, the Internal Revenue Code states that a personal foreign exchange gain of $200 or less does not have to be reported.  Therefore, in practice the Foreign Mortgage Gain calculations are not typically performed.

With the substantial rise in real estate values in most Canadian cities, we have seen many U.S. persons pay U.S. tax on the sale of their principal residence when they had assumed the sale would be tax-free.  It’s important that U.S. persons become familiar with these rules and plan for any potential U.S. tax on the sale of their home. 

Cadesky U.S. Tax is a full service advisory and compliance firm.  We monitor U.S. tax news that may be of interest to our readers and share our thoughts in U.S. Tax Tips.    If you require our assistance please do not hesitate to reach out to us.

Housing Deductions – Impacts of the 2017 Tax Cuts and Jobs Act

The passing of the 2017 Tax Cuts and Jobs Act (TCJA) introduced many changes for taxpayers.  Of significant importance for U.S. taxpayers abroad were the repatriation provisions under IRC §965 and the introduction of the new Global Intangible Low Taxed Income (GILTI) regime under IRC §951A.   We have discussed and will continue to discuss these provisions as necessary.

A major selling point, of the legislation, was the simplification of the tax filing process for many individual taxpayers.  Individual taxpayers, regardless of their filing status, can reduce their taxable income by claiming the larger of itemized deductions or the standard deduction.  The TCJA (almost) doubled the level of the standard deduction.  It has been estimated that the number of individuals claiming the standard deduction in 2018 will increase from 70% of returns to approximately 90% of returns.  The 2018 standard deduction (before and after the enactment of the TCJA) were

Single$6,500$12,000
Head of Household$9,550$18,000
Married Filing Jointly$13,000$24,000

These amounts are indexed for future years.

U.S. persons living abroad have always been taxable on their worldwide income.  Conversely, by and large, they have always been able to claim worldwide expenses.  The TCJA made changes as to what and how much housing expenses can be claimed as itemized deductions.  Many taxpayers will find, that because of the increase in the standard deduction and the corresponding  decrease in the ability to deduct certain itemized deductions (as discussed below), that they too will claim the standard deduction rather than itemizing.

 Two of the most common itemized deductions relate to mortgage interest and real estate taxes.

Mortgage interest

In general, no deduction is allowed for personal interest paid or accrued during the taxable year.  The Internal Revenue Code, however, has statutory exceptions – one of the most important being for “qualified residence interest”.  As such, taxpayers may deduct, as an itemized deduction, qualified residence interest up to statutory limits.  Qualified residence interest includes:

  1. interest on acquisition indebtedness and
  2. home equity indebtedness

with respect to any qualified resident of the taxpayer.

Acquisition indebtedness is defined as mortgage debt used to acquire, build, or substantially improve the taxpayer’s primary residence (or a designated second residence), and secured by that residence. 

Historically taxpayers were able to deduct mortgage interest on up to US $1,000,000 of home acquisition indebtedness.  As of January 1, 2018, taxpayers will be able to deduct the interest they pay on their mortgages up to US $750,000 in new mortgage debt. Married couples filing separately can claim up to US $375,000 each in mortgage interest deductions. This is a decrease of the former limit of $1 million for single filers and married couples filing jointly, and $500,000 for married couples filing separately.

Mortgage Interest Deductibility – By the Numbers

  • Interest payments are deductible on mortgage debt of up to US $750,000—formerly US $1,000,000
  • Married couples filing separately can deduct interest on mortgage debt up to US $375,000 each—formerly US $500,000
  • Up to 2025, these new limits won’t apply to mortgages originated before December 15, 2017
  • Deduction for other home equity debt (HELOCs and second mortgages) eliminated—formerly US $100,000

In the short term, these changes only affect people who take out new purchase mortgages.  Houses purchases that were under a binding written contact by December 15th and which closed by January 1, 2018 are also eligible for the $1,000,000 threshold.  These changes sunset as of December 31, 2025 (unless Congress acts to make these changes permanent).   

The TCJA also completely eliminated the deduction for interest paid on other home equity debt. Previously, taxpayers could deduct up to $100,000—$50,000 for married couples filing separately—on the interest payments for home equity loans and home equity lines of credit (HELOCs).

IRS News Release IR-2018-32

The IRS, in news release IR-2018-32, provides the following examples of the mortgage interest deduction –

Example 1: In January 2018, a taxpayer takes out a $500,000 mortgage to purchase a main home with a fair market value of $800,000. In February 2018, the taxpayer takes out a $250,000 home equity loan to put an addition on the main home. Both loans are secured by the main home and the total does not exceed the cost of the home. Because the total amount of both loans does not exceed $750,000, all of the interest paid on the loans is deductible. Your mortgage interest deduction is not limited.

However, if the taxpayer used the home equity loan proceeds for personal expenses, such as paying off student loans and credit cards, then the interest on the home equity loan would not be deductible.

Example 2: In January 2018, a taxpayer takes out a $500,000 mortgage to purchase a main home. The loan is secured by the main home. In February 2018, the taxpayer takes out a $250,000 loan to purchase a vacation home. The loan is secured by the vacation home. Because the total amount of both mortgages does not exceed $750,000, all of the interest paid on both mortgages is deductible. Your mortgage interest deduction is not limited.

However, if the taxpayer took out a $250,000 home equity loan on the main home to purchase the vacation home, then the interest on the home equity loan would not be deductible.

Example 3: In January 2018, a taxpayer takes out a $500,000 mortgage to purchase a main home. The loan is secured by the main home. In February 2018, the taxpayer takes out a $500,000 loan to purchase a vacation home. The loan is secured by the vacation home. Because the total amount of both mortgages exceeds $750,000, not all of the interest paid on the mortgages is deductible. A percentage of the total interest paid is deductible (see IRS Publication 936). In other words, your mortgage interest deduction is limited.

Real Estate Taxes

There were two significant changes with respect to real estate taxes.  First, the total of all state and local income taxes and property taxes are limited to a maximum of US $10,000.  For many U.S. taxpayers who do not reside in the United States and who do not pay any U.S. state and local income tax this restriction just impacts their ability to deduct their property taxes.  The second significant change, however, is that foreign property taxes are no longer eligible as an itemized deduction. 

The ability for U.S. persons abroad to claim itemized deductions has been severely limited.  As such, many taxpayers will just claim the increased standard deduction.

Cadesky U.S. Tax is a full service advisory and compliance firm.  We monitor U.S. tax news that may be of interest to our readers and share our thoughts in U.S. Tax Tips.    If you require our assistance please do not hesitate to reach out to us.

The Foreign Tax Compliance Act (FATCA) – It’s happening! FBARs and Form 8938 – A reminder

There has been much in the news lately about the IRS collecting information about bank and financial accounts held overseas by U.S. persons.  We thought this would be a good time to review what are the required disclosures for U.S. persons with offshore assets and what the U.S. is doing with this information. 

U.S. persons who have an interest in (direct or indirect), signing authority, or any authority over non-U.S. financial accounts may be required to disclose that interest on FinCEN Form 114, “Report of Foreign Bank and Financial Accounts” or “FBAR”.  If the aggregate value of all such interests exceeds US $10,000 at any time during the year then a timely filed FBAR is required. Note that this US $10,000 threshold is not per account but an aggregate threshold.  It has been our experience that many taxpayers continue to think that the threshold is per account – that is clearly not the case!

The FBAR is due April 15th but taxpayers receive an automatic extension until October 15th.  It is filed directly with FinCEN in the Department of the Treasury and is not part of an individual’s tax return.  There are potentially significant penalties for non-compliance.  Those found guilty of not filing due to willfulness (in other words they knew they had to file and for whatever reason,  choose not to) are potentially subject to a penalty equal to the greater of (i) 50% of the account balance or (ii) US $100,000. Yes, the IRS has imposed these penalties!  It is a significant tool the IRS uses when it goes after taxpayers charged with committing off-shore tax evasion.

For those who do not file, but their failure to file is not due to willfulness, they may be subject to a US $10,000 penalty.  It has been our experience that this penalty is rarely assessed, however taxpayers cannot rely on what the IRS has done in the past.

Much of the same account information required for the FBAR is also required for Form 8938, which is filed along with a U.S. person’s income tax returns.  The Form 8938 requires information on a taxpayer’s “specified foreign assets” which, in addition to bank accounts, also includes foreign pensions, shares of foreign corporations not held in an account, and other foreign assets.  The filing threshold for Form 8938 is higher than that for the FBAR and is different for U.S. persons residing inside or outside of the United States.  These filing thresholds are: 

  • Unmarried taxpayers living in the US: The total value of your specified foreign financial assets is more than $50,000 on the last day of the tax year or more than $75,000 at any time during the tax year
  • Married taxpayers filing a joint income tax return and living in the US: The total value of your specified foreign financial assets is more than $100,000 on the last day of the tax year or more than $150,000 at any time during the tax year
  • Married taxpayers filing separate income tax returns and living in the US: The total value of your specified foreign financial assets is more than $50,000 on the last day of the tax year or more than $75,000 at any time during the tax year
  • Unmarried taxpayers living outside the of the US: The total value of your specified foreign assets is more than $200,000 on the last day of the tax year or more than $300,000 at any time during the year
  • Married taxpayers filing a joint income tax return and living outside of the US: The value of your specified foreign asset is more than $400,000 on the last day of the tax year or more than $600,000 at any time during the year
  • Married taxpayers filing separate income tax returns and living outside of the US:  The total value of your specified foreign assets is more than $200,000 on the last day of the tax year or more than $300,000 at any time during the year

The Foreign Account Tax Compliance Act (FATCA) was introduced as part of the Hiring Incentives to Restore Employment (HIRE) Act (P.L. 111-147).  President Obama signed the bill into law on March 18, 2010. 

One of the components of FACTA was the requirement for foreign financial institutions (i.e., Canadian banks and brokers) to disclose to the IRS information on their U.S. customers.   The Canadian Department of Finance entered into an Intergovernmental Agreement (“IGA”) with the United States to allow for the enactment of FACTA within Canada.  Under the IGA Canadian financial institutions will now disclose the required information to the CRA instead of sending it directly to the IRS.  The CRA will, in turn, share that information with the IRS under the mutual information exchange agreement.

It is important to note that banks will only share information on non-registered accounts with a balance in excess of US $50,000.  Registered accounts (such as RRSPs and TFSAs) are excluded from this reporting requirement.  This greatly reduces the number of accounts subject to the IGA.

On January 23, 2019 the CBC issued an article (www.cbc.ca/news/politics/tax-facta-u-s-canada-1.4988135) stating that, under this agreement, the CRA has shared over 1.6 million banking records with the IRS since 2014.  In 2017 alone, 600,000 banking records were shared.  The number of individuals affected by this is much less, as many of the individuals had more than one account reported.

Among the items of Canadian bank account information being shared with the U.S. are the names and addresses of account holders, account numbers, account balances or values, and information about certain payments such as interest, dividends, other income and proceeds of disposition.

What is clear is that the ability to hide information from tax authorities is becoming harder to do.  U.S. persons in Canada need to be understand what their filing and disclosure obligations are and to timely file these information returns.  The IRS will take the information, they received from the CRA, and cross-check it against the returns the taxpayer has filed with the IRS.

Those who file their U.S. returns and tick the no box on Schedule B Part II, Foreign Accounts and Trusts, may be guilty of a willful violation if any accounts are not disclosed.  As discussed above, the penalties can be quite onerous. 

The staff and Cadesky US Tax can assist U.S. persons in determining what your foreign asset disclosure requirements are and can help prepare the necessary disclosure reports.  Please contact us for further information.

2019 U.S. Tax Rates

On November 15, 2018 the IRS issued Revenue Procedure 2018-57.  This Rev. Proc. outlines the indexed amounts and thresholds for the 2019 tax year.  This includes the four tax tables: Table 1, IRC §1(j)(2)(A) – Married Individuals Filing Joint Returns and Surviving Spouses; Table 2, IRC §1(j)(2)(B) – Head of Households; Table 3, IRC §1(j)(2)(C) – Unmarried Individuals (Other than Surviving Spouses and Head of Households; and Table 4, IRC §1(j)(2)(D) – Married Individuals Filing Separate Returns.  Cadesky U.S. Tax has put together a summary of those provisions that we feel are relevant for U.S. persons resident in Canada.  Please check out our website at http://cadesky.tax/wp-content/uploads/2019/01/U.S.Personal.Income.Tax_.Rates-2019.pdf.

It should be noted that under the 2017 Tax Cuts and Jobs Act (TJCA) there is no deduction for a personal exemption amount for tax year 2019. In addition, there was a significant increase in the amount of the standard deduction, which was almost doubled.  Many taxpayers who would have claimed itemized deductions in the past may now be better off claiming the standard deduction.  While the 2017 TCJA significantly reduced U.S. corporate tax rates it only slightly reduced personal tax rates with the top marginal rate reduced to 37% from 39.6%.

Many of these changes will expire on December 31, 2025 as these provisions are subject to a sunset provision under the “Byrd Rule”.

Under the Byrd rule, the Senate is prohibited from considering an extraneous matter as part of a reconciliation bill or resolution or conference report thereon. Technically the 2017 Tax Cuts and Jobs Act was a reconciliation bill and hence is subject to the Byrd Rule. The Byrd rule is enforced when a Senator raises a point of order during consideration of a reconciliation bill or conference report. If the point of order is sustained, the offending title, provision or amendment is deemed stricken unless its proponent can muster a 3/5 (60) Senate majority vote to waive the rule.   The Senate passed the 2017 TCJA by 51-48 so the 60 vote threshold was not met meaning that the Byrd rule was not waived. 

At this point in time, it is unclear what the intent of Congress is with respect to making permanent many of these changes.  Only time will tell.

The Canadian tax rates still remain substantially higher than the corresponding U.S. tax rates and brackets.  As such for U.S. persons resident in Canada the change in the U.S. personal tax rates and the doubling of the standard deduction is a moot point.  Canada dictates what their global tax would be. Lowering the effective overall U.S. tax rate will result, in most cases, in the creation of more excess foreign tax credits (which will probably expire unused).  As such, such taxpayers may wish to forego claiming itemized deductions altogether to simplify their U.S. filings. 

Cadesky U.S. Tax is a full service advisory and compliance firm.  We monitor U.S. tax news that may be of interest to our readers and share our thoughts in U.S. Tax Tips.    If you require our assistance please do not hesitate to reach out to us.