IRS Campaign Targeting Foreign (Canadian) Corporations

In January 2017, the IRS Large Business and International (LB & I) division has announced the identification and selection of 13 campaigns targeting areas that represent a risk of non-compliance. The LB&I is heading towards issue-based examinations and compliance campaign process where the organization decides which compliance issues that present risk are going to require action. One of those campaign target areas is in the area of cross-border activities. The overall goal of the campaigns is to improve return selection, identify issues that bring a risk of non-compliance, and make the best use of limited available resources.

Canadian Corporations Doing Business in the U.S.

One of the 13 campaigns identified for this initial roll out involves foreign companies doing business in the U.S. who are often required to file Form 1120-F, U.S. Income Tax Return of a Foreign Corporation. The goal is to get more voluntary compliance activity by foreign corporations (i.e. Canadian corporations) with a U.S. business nexus (or taxable presence). LB&I has data suggesting many companies are not currently meeting their filing obligations. They have various sources they can use to identify these foreign companies and will encourage them to voluntarily file their required returns. The treatment stream for this campaign will involve soft outreach letters. If a company does not take appropriate action, the LB&I will conduct examinations to determine the correct tax liability and enforce payment.

For more information please contact a member of our U.S. Tax Services team at 403-296-0082.

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