Jan 19, 2022
As we advised in Tax Tip 20-04 , significant additional disclosure and filing requirements for trusts were announced in the 2018 Federal Budget and are scheduled to apply for trust’s 2021 and subsequent tax years.
U.S. citizens abroad are burdened with the same federal tax compliance obligations as U.S. residents. In fact, one can argue that U.S. citizens abroad have more compliance obligations, as they typically have foreign asset, foreign corporation and/or foreign trust filing obligations. Historically, however, the Internal Revenue Service (“IRS”) has not provided the same level of service to U.S. citizens abroad as they to do U.S. residents. As the IRS expands its online service offerings this uneven level of service seems destined to continue.
Many U.S. citizens abroad have had the frustrating experience of trying to reach the IRS by telephone, only to discover that the toll-free “800” telephone numbers, published for IRS service lines, do not work for telephone calls made from outside the United States. This means that U.S. citizens abroad can only reach the IRS at their own expense while it is a free call for U.S. residents. This gets even more frustrating when one discovers that certain departments and individuals only have “800” contact numbers and no published local number, leaving access to these telephone lines impossible for those outside of the United States. [Hint: try using Skype, Google Hangouts, or some other VOIP phone service in order to call these “800” numbers.]
The ability to provide original documentation to the IRS is also limited for those outside the country. When required to provide original documentation, taxpayers residing in the United States have the ability to visit a local IRS Service Center or Social Security office. Until recently, taxpayers abroad were able to visit a U.S. embassy or consulate to have their original documentation certified and then forwarded to the IRS or the Social Security Administration. Last October, these services were suspended. This means that taxpayers must now return to the United States and visit an office in person. For those of us in Toronto, our “local” Social Security office is in Niagara Falls, New York. For those in the Ottawa area, it is Ogdensburg, New York.
As the IRS expands its online service offerings, it appears that they have again neglected to consider the needs of U.S. citizens abroad. Last year the IRS launched “View Your Account” where taxpayers are able to view their basic tax information online. Basic information includes copies of the recent years’ tax return transcripts, account balance information, and payment plan information. Taxpayers can also pay their outstanding taxes with a debit or credit card through this site. While the information is not as robust or as sophisticated as the CRA’s “My Account”, at least it’s a start.
But, there’s a catch. This IRS is using a U.S. credit agency to verify the identity of those registering to use the “View Your Account” service. Taxpayers must provide a U.S. credit card, or information from a U.S. mortgage or auto loan in order to pass the online security and register. Those without a current U.S. credit history are not able to clear the security and thus cannot register for this service. There are currently no alternatives available. [For those who want to try and register, you can access the “View Your Account” web page at https://www.irs.gov/payments/view-your-tax-account].
Similarly, the U.S. Social Security Administration (“SSA”) has been encouraging U.S. citizens to sign up for “My Social Security” to manage Social Security benefits online. With “My Social Security”, a U.S. citizen can view projected Social Security benefits, register to begin receiving benefits, and can manage administrative tasks such as a change of address. In fact, SSA no longer mails out Social Security benefit statements to those paying in to the system — this information is now only available online.
However, registering for this service is even more difficult than “View Your Account.” In addition to requiring a U.S. credit history, the user must also have a current U.S. address in order to register. This precludes U.S. citizens abroad from registering for this service, and arguably this is the group of persons that would be best served by using online services. [For more information, visit https://www.ssa.gov].
At Cadesky U.S. Tax, we believe that part of our mission is to advocate for U.S. citizens abroad. We recently sent a member of our staff to the IRS Nationwide Tax Forum in Atlanta, GA, where we had the opportunity to raise some of the obstacles facing international taxpayers. We provided feedback directly to IRS and Social Security staff regarding the online registration limitations, and these staff are taking our feedback under advisement. We also participated in a focus group on the delivery of IRS services, sponsored by the Taxpayer Advocate Service, where we provided feedback about international taxpayers.
The IRS does not seem to recognize that there is the imbalance of service offerings between U.S. citizens abroad and U.S. resident taxpayers. Until these services offerings are better balances, we will continue to speak up. We encourage all U.S. citizens abroad to do the same.
U.S. TAX TIP is provided as a free service to clients and friends of Cadesky U.S. Tax.
The material provided in this U.S. Tax Tip is believed to be accurate and reliable as of the date of posting. Tax laws are complex and are subject to frequent change. Professional advice should always be sought before implementing any tax planning arrangements. Neither Cadesky Tax nor Cadesky U.S. Tax can accept any liability for the tax consequences that may result from acting based on the contents hereof.