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Written by: Sumiyo Tymchuck, CPA, CA, CPA (Washington)
Do you need an IRS Transcript?
The Canada Revenue Agency (“CRA”) often requests taxpayers to provide supporting documents for claims made on their tax returns.
For a foreign tax credit (“FTC”) claim for US taxes paid, the CRA requires the US tax return transcript (IRS transcript), which is obtained from the Internal Revenue Agency (“IRS”). The taxpayer can obtain the IRS transcript online if they have an online account with the IRS.
Unfortunately, most US taxpayers residing in Canada do not have an IRS online account. Until recently, tax professionals were able to make an IRS transcript request by calling the IRS with a signed Power of Attorney. The IRS would then directly fax the transcript to the professional immediately.
This 3rd party faxing service was discontinued on July 1, 2019, due to the IRS’s effort to increase protection of the taxpayer’s identity. Instead, IRS transcript requests are now mailed to the taxpayers’ address on record. It may take 3 – 6 weeks for the taxpayer to receive their transcript due to the processing time and physical mailing time.
The CRA usually provides 30 days for a taxpayer to respond to the request for supporting documentation. Therefore, the taxpayer would need to request an extension from the CRA due to the delay in obtaining the IRS transcript.
If you receive a request from the CRA to provide supporting documents for the US taxes paid, you must act quickly to obtain the IRS transcript. Alternatively, if you are claiming the FTC for the US taxes paid, you can be proactive and request the transcript beforehand.
Manning Elliott LLP operates a United States Specialty Group that offers assurance and tax advisory services. Please contact any member of the Manning Elliott Tax Team for assistance with IRS transcript requests.
This content is believed to be accurate as of the date of posting. Tax laws are complex and are subject to frequent change. Professional advice should be sought before implementing any tax planning. Manning Elliott LLP cannot accept any liability for the tax consequences that may result from acting based on the information contained therein.