Changes to the US Treasury Department Reporting Requirements
You should be aware of the expanded base of those who are required to file these forms and the IRS’ stated zero tolerance policy
United States Treasury Form TD F 90-22.1 is required to be filed annually by any US. person who has a "financial interest" in or "signature authority" or any "other authority" over financial accounts located outside the United States and where the accounts, in aggregate, exceed USD 10,000 at any time in the year. You are probably aware that a US citizen, living in Canada, has to file these forms for RRSP and bank accounts.
The rules have recently been expanded to include more filers. In addition to US citizens or residents, the form must now by filed by self-employed nonresidents engaged in US business, and foreign corporations with a US presence that have US employees with relevant signing authority. It may also apply to non-US resident partners of any partnership engaged in a US business.
An individual or a branch of a Canadian or other non-US entity that is doing business in the United States is now also required to file this report.
The reportable amount is now the highest value in the account at any time during the calendar year translated into US dollars at the December 31 exchange rate. The deadline for filing is June 30th, with no extensions.
Disclosure is mandatory. Civil and criminal penalties can be assessed for failure to file the form, to supply information, or for filing a false or fraudulent report. The penalty for a non-willful failure to file the form can be up to USD 10,000.
"Willful" violations are subject to increased penalties (50% of the account balance with a minimum penalty of $100,000 per account). Criminal violations are subject to even greater penalties.
While, in the past, the Treasury Department has not actively enforced the rules, their approach may be changing. The IRS is on record as stating that they will begin to assess penalties for failure to file information returns related to foreign entities and transactions.
You should be aware of the expanded base of those who are required to file these forms and the IRS' stated zero tolerance policy.
Travelling to the U.S.A.?
The 183 Day Rule
The 183 rule is the basis for defining which country you are considered to be a resident of. Your residency determines to which country you are to pay taxes to — the US or to Canada. Each country has a different basis on which it assess taxes to the individuals — for example the IRS has a very different treatment of the amounts held in your RRSP's or RIF's, personal residences, gambling winnings to name a few items.
The IRS brought in a modification to the 183 rule a few years ago but until recently had not been enforcing the modification — the modification is as follows:
Determine the days you are in the US this year and to that add 1/3 of the days you were there last year and 1/6 of the days you were there two years prior — if this total is greater than 183 then they consider you to have met the "substantial presence test" and they can treat you as a US resident for US income tax purposes.
What to Do? File
IRS Form 8840 each year to show that your closer connection is infact Canada — there is a provision for late filing of this form with your 1040NR.
Gambling Winnings
You can claim the taxes withheld on your winnings by filing a 1040NR however to do so you must also obtain a Taxpayer Identification Number from the IRS. This is obtained by completing the W-7 form and producing appropriate documentation of identity. You may be asked for the dates , location, name of the casino etc as well as others who could act as references at the time of your good fortune.