Canadians subject to change in reporting rules by IRS

As of June 30, 2009, Canadian companies, their employees and Canadians who do business in the United States may be required to report detailed information to the U.S. Internal Revenue Services about their Canadian bank and financial accounts if the account value exceeds US$10,000.
Failure to comply or fill in the FBAR (report of foreign bank and financial accounts) form on or before June 30 of the following year may result in civil and criminal penalties.
Maximum penalties would be a fine of US$500,000 and imprisonment for up to five years, a KPMG Canada release warns.
No filing extensions are granted. Thus, the filing deadline for the 2008 tax year is June 30, 2009.
Although this FBAR form has been required for years, the IRS recently expanded the definition of “U.S. persons” who must report to include certain individuals who are neither citizens nor residents of the U.S. and to certain non-U.S. corporations, the release says.
The change applies for reports due for the 2008 tax year.
According to KPMG, individuals who only sporadically conduct business in the United States or who go there occasionally to meet with customers or business associates are not considered to be “in and doing business in the United States.”
Jim Yager, head of International Executive Services at KPMG, says the IRS has provided little guidance and has not been clear on when it would expect a Canadian travelling to the U.S. on business to be subject to the rule.
“We are hopeful that the IRS will provide more definitive guidelines and limit the seemingly broad scope for a Canadian individual or company to fall within these provisions,” Yager said.