Duplicative U.S. tax reporting should end

Americans living in Canada and their advisors will welcome the American Institute of CPAs (AICPA)’s call for the U.S. government to end duplicative tax reporting rules for foreign accounts.

In a recent letter, the AICPA urges the U.S. Department of the Treasury and the Internal Revenue Service (IRS) to simplify the tax compliance process for some Americans living overseas by eliminating rules requiring these Americans and their foreign banks to report identical information to the IRS.

The AICPA recommends relief for foreign accounts established in the taxpayer’s country of residence provided that the United States was already directly receiving information from the financial institutions under the Foreign Account Tax Compliance Act (FATCA).

Troy K. Lewis, CPA, CGMA, chair of the AICPA Tax Executive Committee, wrote, “These taxpayers have established the accounts as part of their day-to-day living, with no intent to hide assets or knowingly avoid their income tax liabilities. We believe it is unfair to subject these taxpayers to complicated, time-consuming, and potentially expensive reporting requirements for information available to the IRS from alternative sources….The reporting required by taxpayers is duplicative and imposes an unnecessarily harsh burden in terms of time, effort and expense with no significant benefit to Treasury or the IRS.”

For details, read AICPA’s press release.