Latest news with #taxprofessionals
Globe and Mail
2 days ago
- Business
- Globe and Mail
Canadians still can't access information about TFSA accounts in latest CRA website glitch
After a tax season marred by technical troubles, Canadians still can't access information about their tax-free savings accounts (TFSAs) through the Canada Revenue Agency's web portals. Online advisories currently warn both taxpayers accessing their individual online accounts and tax professionals logging in on behalf of their clients that details about their TFSAs, including contribution limits, remain unavailable. The CRA said the issue is related to delays in processing the TFSA returns that financial institutions submit annually. To avoid displaying incorrect information on its portals, the agency has blocked its TFSA dashboards since April 17, spokesperson Nina Ioussoupova said via e-mail. 'We are currently working to update TFSA information in My Account as soon as possible. We regret the inconvenience and thank taxpayers for their patience,' she said. The CRA has not responded to a question sent Wednesday evening about about what caused the processing delays. The unavailability of TFSA information from the CRA can make it harder for Canadians to calculate how much they can add to their TFSA this year without risk of overcontributing, which triggers a steep penalty. Some tax experts said the TFSA glitch is another technical woe that risks further undermining public confidence in the reliability of the CRA's website. A systems update earlier this year resulted in many Canadians not seeing some of their tax slips from their CRA accounts, while some reported seeing duplicate tax slips and receiving incorrect error codes when trying to submit their tax returns electronically. The CRA's site currently carries an advisory warning taxpayers that not all their slips may be displayed on their online accounts or be included if they use the auto-fill feature to populate their returns. Where are your tax slips? Why so much information is missing from CRA accounts this year You've been flagged for a CRA audit. Here's what happens next The lack of information about TFSAs on CRA portals is only a minor nuisance for Canadians who regularly add the maximum amount or those who know they have lots of contribution room and have no plans to make big deposits, said Aravind Sithamparapillai, a financial planner at Ironwood Wealth Management Group. But the issue is likely to be a headache for those who need to verify they have enough room for a one-off large contribution, he added. Mr. Sithamparapillai often gets questions about available contribution room from clients who have received a bonus or inheritance or those who want to ramp up their savings after graduating from university or coming off parental leave. The maximum amount Canadians can contribute to their TFSAs depends on an annual dollar limit determined by the government every year, as well as on past deposits and withdrawals. Adding more than what's allowed to the account attracts a penalty of 1 per cent of the excess contribution per month. The CRA website typically reports taxpayers' available contribution room. Mr. Sithamparapillai cautions that the tax agency's TFSA information isn't always up to date and can be incomplete. For example, account activity from the previous calendar year typically doesn't show in CRA portals until March or April, after the agency has received the information from account issuers and processed it. And the CRA's estimate may not account for years in which a taxpayer lived abroad, during which no additional contribution room accrues, he added. Mr. Sithamparapillai keeps track of each client's contributions and withdrawals to be able to provide reliable, up-to-date information on contribution room. But the CRA's TFSA dashboard allows taxpayers and their advisers to check their own information and calculations. And the tax agency's tally is an essential starting point when Mr. Sithamparapillai must calculate the contribution room for new clients. Attempting to do so without referencing the CRA information would require piecing together the individual's history of activity in the account based on their account statements. It's an exercise that can be both labour-intensive and risky because of the chance of missing some information, he said. In general, the TFSA hitch adds to concerns about the CRA's website at a time when the agency is pushing to move more of its interaction with taxpayers online, said Joseph Devaney, a director at the financial education platform Video Tax News. 'We have yet another demonstration of glitches in CRA's system at a point in time when they are trying to force all businesses to use an online-only method of communication with them,' Mr. Devaney said.
Forbes
4 days ago
- Business
- Forbes
Foreign Grantor Trusts, Section 679, And U.S. Taxes
IRS foreign grantor trust Grantor trusts are treated differently from other trusts for federal income tax purposes. Whereas many trusts are respected as separate entities, grantor trusts are disregarded with the grantor (or deemed owner) of the trust required to report the trust's tax items (e.g., income, deductions, credits, etc.). Generally, a trust is characterized as a grantor trust if the trust meets one or more of the requirements set forth in the grantor-trust rules (i.e., sections 671 through 679). Foreign trusts often qualify as grantor trusts under the grantor-trust rules. Indeed, section 679 of the Code specifically targets foreign trusts for this tax treatment if the trust has a U.S. transferor and U.S. beneficiaries. Where section 679 applies, the U.S. transferor is treated as the grantor of the trust, requiring the transferor to report the trust's income and other items on a tax return and corresponding international information returns such as IRS Form 3520-A, Annual Information Return of Foreign Trust with a U.S. Owner. Because many tax professionals and taxpayers are unaware of the nuances of section 679, the provision often acts as a trap for the unwary. Prior to discussing section 679, it is important to understand the term 'foreign trust' as section 679 only applies to these types of trusts. Under federal tax law, a trust means an arrangement in which a trustee takes title to property for the purpose of protecting or conserving it for the benefit of third-party beneficiaries. To determine whether a foreign entity is a trust or another type of legal arrangement (e.g., a foreign corporation), taxpayers must analyze applicable foreign law against the backdrop of U.S. tax principles. If the arrangement constitutes a trust for U.S. tax purposes, the next inquiry is whether the trust is foreign. Generally, a trust is foreign if a U.S. court lacks the authority to exercise primary supervision over the trust or a U.S. person lacks the authority to control the decisions of the trust. All other trusts are considered domestic trusts and not subject to section 679. Section 679 applies if a U.S. person transfers property or cash to a foreign trust and the foreign trust has a U.S. beneficiary. For these purposes, U.S. persons and beneficiaries include U.S. citizens and residents. To qualify as a U.S. beneficiary of a foreign trust under section 679, the U.S. beneficiary must have rights to trust income or corpus. Therefore, a foreign trust has a U.S. beneficiary under section 679 if: (i) any part of the trust's income or corpus may be paid or accumulated during the tax year to or for the benefit of a U.S. person, or (ii) if the trust was terminated in the tax year, any part of the trust's income or corpus could be paid to or for the benefit of a U.S. person. Trust income and corpus is deemed accumulated even if the U.S. person's interest in the trust is contingent on future events. Generally, the trust's governing documents and applicable foreign law determine whether a U.S. beneficiary has rights in the income or corpus of a trust. However, section 679 recognizes that U.S. persons may enter into oral understandings concerning the trust's administration—accordingly, section 679(c)(5) provides that the IRS may look beyond the trust's written documents to determine whether there is a U.S. beneficiary. In some instances, foreign persons may establish a foreign trust and relocate to the U.S. Under section 679(a)(4), a foreign trust becomes subject to the section 679 grantor-trust rules if a nonresident alien individual transfers property or cash to a foreign trust and becomes a U.S. resident within five years of the transfer date (assuming the foreign trust also has a U.S. beneficiary). A nonresident alien individual's starting date for these purposes is governed under section 7701(b)(2)(A). For example, an individual who becomes a lawful permanent resident (e.g., a green-card holder) and who does not meet the substantial presence test in that tax year has a starting residency date based on that person's first day present as a lawful permanent resident. If the individual satisfies the substantial presence test, the starting residency date is the first day in which the individual was physically present in the U.S. Section 679 also provides a special rule for domestic trusts that are later treated as foreign trusts. Under this rule, section 679 applies if a U.S. citizen or resident transfers property to a domestic trust and the trust becomes a foreign trust during that person's lifetime. Where this rule applies, the U.S. person is deemed to make a transfer of property to the foreign trust as of the date the trust becomes foreign. Notably, section 679(d) contains a provision that presumes that a foreign trust has U.S. beneficiaries (i.e., that it falls within the scope of section 679). Therefore, if a U.S. person transfers property or cash to a foreign trust, the IRS may treat the trust as having U.S. beneficiaries unless the person: (i) submits any requested information to the IRS, and (ii) demonstrates to the satisfaction of the IRS that the trust does not have U.S. beneficiaries. Foreign trusts often hold investments and other income-producing properties. Although foreign trusts are often not subject to U.S. income tax, they become subject to such taxes when section 679 applies. In these instances, the U.S. transferor must report the foreign trust's income under the grantor-trust rules. In addition, the U.S. transferor must often prepare and file substitute IRS Forms 3520-A on behalf of the trust to report the trust's activities to the IRS. The failure to understand the broad scope of section 679 can result in adverse U.S. tax consequences, including required payment of prior year income taxes, interest, and significant penalties.
CBS News
4 days ago
- Business
- CBS News
Tax relief: Should you hire a pro or do it yourself?
We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms. You may be able to solve your IRS problems on your own, but in some cases, securing professional help makes more sense. Getty Images/iStockphoto When you're staring down an overdue tax bill, a stack of unfiled returns or an ominous letter from the Internal Revenue Service (IRS), it's tempting to procrastinate on finding a solution. After all, the idea of dealing with the IRS can be overwhelming, especially considering how complicated tax issues can be. But avoiding the problem only makes it worse, as the penalties and interest can stack up quickly, and before you know it, you're in deeper than you ever thought possible. That's when the idea of tax relief comes into focus, and so does the big question of whether you should hire a tax relief professional or try to handle things on your own. When you pursue tax relief, the goal is typically to find ways to reduce, settle or better manage your tax debt. And while the IRS technically allows you to pursue most of these options on your own, there's also an entire industry built around helping people navigate this process. So, how do you know which route makes sense for your situation? Below, we'll break down when a do-it-yourself approach could make sense and outline when it makes sense to call in reinforcements. Chat with a tax relief expert about your options today. Tax relief: Should you hire a pro or do it yourself? Tax relief is a broad term that covers a handful of IRS programs designed to help taxpayers resolve back taxes. The most common options include setting up installment agreements or monthly payment plans, applying for an Offer in Compromise (meaning that you settle your debt for less than you owe), requesting penalty abatement and proving you're currently not collectible due to financial hardship. These programs won't erase your tax debt overnight, but they can help reduce the burden and prevent more aggressive collection efforts like wage garnishment or tax liens. Some forms of relief are relatively simple to request, especially if your tax debt is under $5,000 and your finances are straightforward. But others, like an Offer in Compromise, involve significant paperwork and must meet strict IRS criteria. In those cases, even getting the paperwork wrong can lead to a rejection. That's where the question of DIY versus professional help really starts to matter. When you should pursue tax relief yourself If your tax debt is on the lower side and you feel comfortable navigating the IRS website or calling their helpline, you may be a good candidate for DIY tax relief. For example, if you just need to set up a payment plan or ask for a penalty to be waived due to a first-time mistake, the process is usually simple and clearly outlined on You can also use the IRS's online tool to apply for a long-term installment agreement in just a few steps. Another situation where DIY might make sense is if your income and expenses are easy to document and you have a clean tax history. The IRS often responds more favorably when you've consistently filed your returns and don't have a long track record of nonpayment. In these cases, doing it yourself can save you the fees that a tax relief firm would charge. Still, you need to be honest about your comfort level. If dealing with forms, financial statements and government paperwork sounds daunting — or if you're likely to procrastinate — doing it yourself may not be the most effective route, even for a simple case. Find out how the right tax relief strategies could help you now. When to hire a tax relief pro Sometimes, the stakes are too high to go it alone. If you owe a large tax balance (typically more than $10,000), are facing IRS enforcement actions like liens or levies or want to pursue an Offer in Compromise, professional help is often worth considering. The tax pros employed by tax relief companies, which typically include enrolled agents, certified public accountants and tax attorneys, understand how to present your case to the IRS in a way that maximizes your chances of approval. You should also consider hiring help if you're dealing with multiple years of unfiled returns, are self-employed or have irregular income. These types of situations can complicate your eligibility for tax relief programs and make the paperwork much harder to handle. A qualified professional can help ensure you're compliant, organize your financials and act as an intermediary between you and the IRS. That said, not all tax relief companies are created equal. Watch out for firms that promise guaranteed results or claim they can settle your debt for pennies on the dollar. No one can promise that outcome, and any reputable provider will take the time to evaluate your specific case before charging large fees. The bottom line If you're planning to pursue tax relief, it can make sense to secure professional help, but it's also possible in certain cases to approach the process yourself. So, before you make a decision, you should weigh the factors and determine the smartest option for your specific circumstances. If your debt is small and your situation is straightforward, handling it yourself could be a smart, low-cost move. But if your finances are complex, the debt is substantial or you're at risk of enforcement actions, it's probably time to bring in a pro. Either way, the worst move is doing nothing. Whether you hire help or take the DIY route, acting sooner rather than later can keep the situation from spiraling further out of control and get you one step closer to financial peace of mind.
Forbes
19-05-2025
- Business
- Forbes
Corporate Tax Departments Emerge As Catalysts To Corporate AI Adoption
Corporate tax professionals have a complicated relationship with artificial intelligence (AI). Over the last decade or so, AI has been pitched as everything from an existential threat to a potential industry savior. Now that the hype machine has slowed and corporate tax teams have been able to actually start using AI-powered tools in their day-to-day work, they've become the unlikely champions of AI-led innovation in the modern corporation. Corporate tax professionals have a complicated relationship with artificial intelligence In fact, when it comes to adopting generative AI (GenAI) tools for research, analysis, and data summarization tasks, corporate tax professionals are leading the way, according to a new report conducted by researchers at Thomson Reuters. An impressive 92% of corporate tax professionals report that they believe GenAI is applicable to their work, a rate that is higher than their counterparts in corporate legal (90%) or corporate risk (88%) departments. What's more, corporate tax professionals are leading in advocacy, with 75% now supporting the use of GenAI for industry work, up from 60% last year. That's higher than the rate of tax firm (71%), law firm (59%) and corporate legal department (57%) advocacy for GenAI adoption, which raises the question: what is driving this overwhelming support for GenAI in the corporate tax department? The pace of acceptance of AI in tax departments may initially seem out of step with the cautious wait-and-see approach that these departments have historically adopted toward new technologies. However, their optimism for AI can be attributed to a perfect storm of regulatory and economic uncertainty. To begin, it's tax and finance professionals who find themselves taking on an increased burden as the business landscape grows ever more complex. Everyone from the VP of tax to data analysts to project managers has seen their roles and responsibilities become increasingly intertwined and expand well beyond the boundaries of what was once considered the norm. From data management to sustainability to unprecedented international trade strife, business leaders are facing a regulatory landscape that seemingly changes with every news cycle. Additionally, these departments face historic challenges in attracting and retaining talent, forcing everyone on their teams to do more with fewer resources. With its ability to streamline many of the most time-consuming aspects of professional work, such as sifting through reams of spreadsheets to find a single anomaly or ingesting and interpreting a mixture of international regulations and compliance requirements, AI is quickly winning hearts and minds by providing professionals with more time to think. These twin forces of increased complexity and growing capacity constraints create the perfect environment for technology adoption to flourish, particularly as AI technology matures. As I discussed previously when describing the rise of agentic artificial intelligence, new capabilities have shifted the focus away from fears of potential failures, revealing practical applications instead and engendering a sense of relief among an overextended workforce. As technology like agentic AI rapidly dissolves the boundaries between different information sources and workflow management solutions, corporations begin to see tangible examples of what the future could really look like. Additionally, the tax professionals in these departments are becoming less concerned about losing their jobs to AI. Among the firms already using GenAI in their day-to-day work, the most common applications are tax research (77%), tax return preparation (63%), and tax advisory (62%). As tax departments are being asked overnight to take on bigger, more forward-looking responsibilities—such as ensuring all their subsidiaries and third-party vendors comply with the latest wrinkle of sustainability regulation or forecasting the next country to strike a tariff trade agreement—some of the tedious, time-consuming tasks can be delegated to better, more refined AI solutions. Of course, we know enough now not to expect the growth of AI to create a technological utopia. With every step forward, there is potential for a host of pitfalls. That's why it's incumbent upon corporate leaders to be open to progress while ensuring that the challenges they face internally don't compel them to rush into adopting solutions that are not yet ready for prime time or battle-tested to perform specific tasks. There is a bit of a Gold Rush mentality playing out in the AI space right now, and – in many cases – new tools are being developed faster than businesses and their clients can effectively evaluate them. In fact, 82% of corporate tax professionals we surveyed said they did not know whether they had any formal policies in place for how their outside tax firms should be using AI. It's important for firms to develop guardrails for the use of AI and to ensure that the solutions they are utilizing can be trusted for professional-grade work. We are at an exciting turning point in the evolution of the corporate tax department, where the decisions we make today will help define the future of the profession.
Forbes
11-05-2025
- Business
- Forbes
The Danger Of Relying On AI For U.S. Tax Advice
U.S. international tax questions demand precise, up-to-date expertise. Professional judgment remains ... More critical. AI simply doesn't have anything close. Artificial intelligence tools such as ChatGPT and Grok are becoming household fixtures with Americans increasingly turning to them. These tools are being used to find answers on everything from cooking recipes to complicated tax questions. How reliable is AI for taxpayers seeking tax advice, particularly on U.S. international tax issues? While AI has laudable capabilities and provides great speed in its responses, the reality is that currently in the U.S. international tax area (indeed, in the tax area generally), AI often delivers inaccurate or incomplete information. Since U.S. international taxation is such a highly specialized field, AI can leave users at risk of costly mistakes. For now, a thorough and proper tax analysis requires the expertise of a seasoned professional who can understand the interplay of the tax law, Treasury regulations, IRS notices and rulings, court cases, and international tax treaties. There is an undeniable appeal of AI in the complicated U.S. tax space that often overwhelms even tax professionals, let alone the lay person. With its speedy answers that are generated so easily and for free, the AI tool seems a godsend in the complicated tax world. For the more straightforward and typically domestic (as opposed to international) tax issues, these tools might be sufficient to point users in the right direction. The cracks in AI's armor start to show when tackling U.S. international tax matters. This is not only because international tax is an area rife with complexity but also because it is highly dynamic. Aside from the technical aspects involved, U.S. international tax is shaped by frequent regulatory updates, IRS interpretations, and judicial decisions. AI struggles to keep pace. Take for example, the proliferation of IRS Practice Units, many of which focus on international tax matters. Practice Units are internal IRS training materials for examiners. The IRS just started issuing these in 2020. As international tax issues are becoming more and more common in today's global economy the IRS has had to be proactive training its agents to understand them and catch noncompliance. The Units are publicly available on but are not binding and cannot be used as precedent. From January to the first week of May 2025 the IRS has already issued 35 such Units. Of these, 22 cover complicated international tax topics such as 'French Foreign Tax Credits', 'Base Erosion Anti-Abuse Tax', 'Foreign Tax Credit Computations', 'Foreign Tax Credit Limitations', 'General Deductions of a Foreign Corporation Engaged in U.S. Trade or Business (Non-Treaty)', 'Reduced Foreign Taxes Under Treaty Provisions' and many more subjects delving into technical international taxation. The Practice Unit resource is just one of many forms of tax guidance that is constantly evolving. The tax laws, regulations, treaties and updates may not be picked up by AI models resulting in incorrect or incomplete answers. The problem of AI's questionable accuracy has its roots in how AI generates its responses. AI tools such as ChatGPT and Grok rely on so-called 'large language models' trained on a huge and diverse amount of text that includes online forums, books, articles, websites and public records. This training results in an end-product that sounds like highly intelligent answers cloaked in perfect conversational text. Critically, this alone is not sufficient for a tax analysis, and it is all too easy to forget that AI cannot think independently. Professional judgement remains critical. AI tools do not guarantee accuracy. This is particularly so in nuanced areas such as international tax which demands precise, up-to-date expertise. There's the significant problem of 'simplexity'. The tax law is highly complex. If AI presents the law as if it is simple, this can result in presenting the law as something different from what the law actually is, as has been encountered with the IRS chatbot 'Interactive Tax Assistant'. Other problems involve misinterpretation, relying on outdated sources, entirely missing out on important information, conflating similar but distinct international tax concepts (e.g., it might confuse the Foreign Tax Credit with the Foreign Earned Income Exclusion) and even 'hallucinating'. My own experiences with an AI 'hallucination' occurred recently. The first, when I asked whether there was an exception in the FBAR filing rules for non-U.S. accounts owned by a foreign government entity. I was examining whether Pope Leo XIV, a U.S. citizen, might have a possible FBAR obligation with regard to accounts at the Vatican Bank. AI incorrectly reported that such an exception existed (the exception applies only to foreign financial accounts of any governmental entity of the United States). Another incident occurred when I asked if the U.S. had negotiated totalization agreements with the countries of Ecuador or Costa Rica and received an (incorrect) answer in the affirmative. No such totalization agreements exist. Other tax professionals testing AI have found incorrect answers, in one instance 100% of the time. Even though answers were on the right track, AI failed to catch the critical nuances, of which the U.S. tax laws are replete. Any of these missteps could lead to incorrect answers or calculations, potentially triggering an IRS audit and penalties. The problem, especially for the layperson, is that the AI generated responses sound so good, that they are taken at face value. Getting things wrong, especially in international tax compliance which remains a top IRS enforcement priority, can lead to serious consequences. Errors in reporting foreign income or assets involves stiff penalties. For example, there is a $10,000 penalty for an untimely FBAR or foreign information return such as Form 8938 or 5471; a 40% accuracy-related penalty on unpaid tax for errors involving foreign assets. Reliance on AI and AI chatbots will not suffice as 'reasonable cause' to avoid imposition of IRS penalties. Last year, the U.S. Taxpayer Advocate Service cited a Washington Post review finding that AI chatbots from leading tax return preparation companies gave inaccurate tax advice up to 50% of the time on complex tax questions. Beyond the significant financial costs that can result from inaccurate AI tax advice, taxpayers face the stress of audits and the burden of correcting mistakes. Currently, AI has serious shortcomings when it comes to U.S. international taxation. Experienced international tax professionals occupy an irreplaceable role and unlike algorithms, they specialize in deciphering the many nuances involved in international tax matters. The top professionals stay current on IRS guidance, monitor treaty updates, and analyze case law on a regular basis. They tailor tax advice to a client's unique situation. Doing this often requires using professional judgment because a one-size-fits-all approach does not work in the international tax world. Tax professionals strategize and provide all-important context that can optimize the tax outcome for each particular case. AI has yet to master any of these skills; it has a long way to go. This isn't to say AI has no place in the world of international tax planning. It can certainly be a useful time-saving tool and starting point for a general explanation of unfamiliar tax concepts. Relying on AI alone, however, is a gamble not worth taking. In time, as AI inevitably evolves, its accuracy and abilities will develop, but at the moment AI is not a substitute for a qualified tax professional. Stay on top of tax matters around the globe. Reach me at vljeker@ Visit my U.S. tax blog
