IRS Streamlined Procedures – Update on Non-Residency Requirements

July 31, 2014

On June 18th, the IRS released revisions to the Streamlined Procedures. Our June 19th blog entry summarized these changes and raised concerns over the non-residency requirement. In particular, the requirement that a person spend more than 330 days outside the U.S. in each of the last three years may disqualify snowbirds, business travelers and frequent cross-border shoppers.

On June 20th, the IRS sent two officials to New York University’s Tax Controversy Forum to answer audience questions. Scott Michel from Caplan Drysdale, a Washington DC law firm, was in attendance and asked a question about Canadian snowbirds and the problem with the IRS revised streamlined procedures. The answer from Jennifer Best, senior adviser, IRS Large Business and International Division, was as follows:

“This is a tough one. We have to make policy decisions and draw lines somewhere” Best said.  “We were tracking section 911 with the 330 days and no abode in the U.S. I think that’s the one that’s going to trip up the snowbirds”.  She said that while the IRS will continue to give the issue further thought “if you’re spending a substantial amount of time in the United States…. you need to be responsible with respect to your tax obligations”

We will continue to follow up with the Internal Revenue Service to express our concerns and request a modification to the procedures.