SR&ED Claims for Dual Citizens of the US and Canada

The Internal Revenue Service is a bureau of the Department of the Treasury in the United States that deals with the enforcement of income tax laws and oversees the collection of federal income taxes. The Canada Revenue Agency in Canada deals with administering the SR&ED program. Both the IRS and the CRA are very detailed on their policies and the type of claims that are allowed.

The United States citizens living in Canada have an obligation of filing their tax in accordance with the IRS. The IRS has rolled out new rules and regulations regarding the filing of tax for dual citizens, which has come as a relief to many Americans living in Canada. Stating that most of their citizens living in Canada are law abiding, hardworking and honest workers, the IRS has added that the only reason that the tax obligations were not being filed was due to a lack of knowledge by US citizens.

Many workers in Canada have found themselves on the receiving end of hefty penalties for late Reports of Foreign Bank and Financial Accounts (FBARs). However, under the new rules, they are only required to file delinquent tax and related information from the past three years rather than six. The IRS also added that taxpayers presenting ‘low compliance risk’ won’t be penalized. Small businesses and startups have also been included in this category.

The new rules and developments allow the taxpayers to be ready for audits by the both the IRS and the CRA especially in regards to SR&ED tax. There have been claims by the taxpayers that the IRS is targeting the R&D claims and benefits of US citizens in Canada. The IRS has not yet responded to these claims.