Both US and Canadian tax systems are based on self-assessment when individuals voluntarily complete their income tax returns and make applicable disclosures. When a taxpayer has previously filed an incorrect or incomplete tax return or failed to disclose certain tax details, the taxpayer may under certain circumstances be permitted to come forward and voluntarily disclose past reporting errors or omissions in exchange for partially or completely reduced penalties and occasionally, interest. The relief is available under voluntary tax amnesty programs offered by the CRA and the IRS. Some of these programs are permanent while others are offered on a temporary basis with or without a definitive timeline.
A disclosure will not be considered to be voluntary where, prior to making the disclosure, a taxpayer was aware of, or had knowledge of the enforcement action set forth by the tax authorities with respect to the information disclosed. In addition, no partial or complete penalty abatement is available to a taxpayer who gets approached with respect to an error by the government body first.
Currently the IRS is administering several tax amnesty programs allowing American citizens, Green card holders and American residents to come forward with previous inaccuracies and omissions related to their foreign income, accounts and assets. These programs are called Offshore Voluntary Disclosure Program, Offshore Streamline Procedures and Domestic Streamlined Procedures.
We have experience assisting taxpayers who wish to come forward with US tax delinquent compliance from the time the IRS introduced the first offshore program in 2009.