In general, U.S. shareholders were
required to pay a transition tax on
the untaxed foreign earnings of
certain specified foreign
corporations as if those earnings
had been repatriated to the United
States. This tax could apply to a U.S.
citizen, resident or Green Card
holders who own an interest in a
private Canadian corporation. This tax applied with
respect to the last taxable year of the relevant specified
foreign corporation that began before January 1, 2018. The
tax was includible in the U.S. shareholder’s year in which or
with which such a specified foreign corporation’s year ended.
The IRS Commissioner of Large Business and International
recently stated that the following two enforcement streams
will commence in October 2020:
– letters will be sent suggesting the filing of amendments
to those (thousands) that the agency believes may
need to more fully comply; and
– audits will commence on those that the IRS believes
failed to comply.
The audits may focus on a number of issues, including, for
example, the calculation of historic earnings and profits, cash
vs. non-cash assets, and foreign tax credits.
ACTION ITEM: If you are a U.S. person potentially
subject to this tax, but have not filed as such, contact us
to discuss your options.
Redistribution of this material is prohibited.