Lengthy Visits To The US Effect On Streamline Application

[beaconhill]

I am a US citizen and Canadian resident who has never filed taxes and I want to become tax compliant by filing three years of tax returns under the streamlined program. In the previous few years I have spent an average of a 3-4 months a year in the US, and always at least 2 months. Does that make me ineligible to file under the streamlined program?
Thanks!

[nelsona]

No. You remain a Cdn resident under all possible tests.

[beaconhill]

Thanks. The reason I asked this question is because of this passage I read on the IRS site regarding eligibility requirements for the streamlined program. It refers to being physically outside the United States for at least 330 full days:

Non-residency requirement applicable to individuals who are U.S. citizens or lawful permanent residents (i.e., “green card holdersâ€￾): Individual U.S. citizens or lawful permanent residents, or estates of U.S. citizens or lawful permanent residents, meet the applicable non-residency requirement if, in any one or more of the most recent three years for which the U.S. tax return due date (or properly applied for extended due date) has passed, the individual did not have a U.S. abode [b]and the individual was physically outside the United States for at least 330 full days.[/b] Under IRC section 911 and its regulations, which apply for purposes of these procedures, neither temporary presence of the individual in the United States nor maintenance of a dwelling in the United States by an individual necessarily mean that the individual’s abode is in the United States. For more information on the meaning of “abode,â€￾ see IRS Publication 54, which may be found at Publication 54.

http://www.irs.gov/Individuals/Internat ... ted-States

[nelsona]

You raise a good point.
The answer provided below would seem to indicate that you do NOT meet the non-residency requirement:

http://www.irs.gov/Individuals/Internat ... nd-Answers

You would be considered non-resident under section 911, but IRS is stating that you must meet the one specifc clause of 911 (the 330 day requirement).

Ouch.

[nelsona]

This atricle discussed this issue at leangth.
http://www.moodysgartner.com/amended-ir ... ma-part-1/

It poses the question as to whether all of 911 could be used to clim non-residency, or even the treaty. it was written BEFORE IRS posted the FAQ that explicitly stated that only the 330-day portion of section 911 would be applied, making snowbirds ineligible to use streamlined process.

[nelsona]

here more explicitly explains snowbirds ineligible:

http://www.moodysgartner.com/updated-ir ... ds-beware/

[beaconhill]

OK, it seems clear that I can't file in the streamlined program because of the amount of time I spent in the United States. That changes my plans considerably. I know if I choose another option available to become compliant I have to file more years of tax returns, and am also subject to fines and penalties. But practically speaking, is it likely that the IRS will impose penalties, or are they just wanting to get people like me in the fold? I don't believe I will owe any US taxes.

[nelsona]

The problem is compliance. Forms that you failed to fill out carry no income tax implications, but do have non- or late-filing consequences.

Otherwise quiet disclosure would still be permitted like I suggested for a full decade before IRS came down on Cdns.