IRS urges Americans living in Canada to come clean after courts allow CRA to share account information with U.S.

The Internal Revenue Service is encouraging all non-compliant U.S. citizens, including those among the 1 million Americans who are resident in Canada, to take advantage of its voluntary disclosure programs initiated in 2009 and 2012.

The move comes just a few weeks after Canadian courts refused to issue injunctions prohibiting the Canada Revenue Agency from disclosing to the IRS information about accounts held by U.S. citizens. Under an inter-governmental agreement relating to the U.S. Foreign Account Tax Compliance Act, Canadian financial institutions are required to transmit account information to the CRA, which in turn was required to start passing it on to the IRS on September 30, 2015.

Since 2009, more than 54,000 U.S. taxpayers have come forward under the voluntary disclosure programs. The disclosures have resulted in some $8 billion in tax collections, writes Roanne Bratz in Stikeman Elliott’s Canadian Securities Law blog.

Recently, the IRS has reiterated that the programs offer “taxpayers with undisclosed income from offshore accounts an opportunity to get current with their tax returns and information reporting obligations. The program encourages taxpayers to voluntarily disclose foreign accounts now rather than risk detection by the IRS at a later date and face more severe penalties and possible criminal prosecution.”