Finally, a Response From the IRS…You Might Be in for a Big Surprise!

Summer 2004 CSANews Issue 51  |  Posted date : May 10, 2007.Back to list

In my last column, I talked about the validity of filing the U.S. Closer Connection Exception Statement, Form 8840. I told you that I was waiting for a response from the Internal Revenue Service, the department responsible for enforcing this law. After speaking to two IRS representatives, two from the media services division of the Department of Immigration and Custom Enforcement and another two from the public affairs division of Customs and Border Protection of Homeland Security, here is what I learned.

I started by asking them five questions that I considered pertinent to the filing of this statement – questions that I am most often asked when speaking to Canadian snowbirds during my many visits to Canadian Clubs and other social events during the winter months.

Q. Are Canadians exempt from this law?
A. No, the law applies to all foreigners visiting the U.S. who meet the Substantial Presence Test, see next question.

Q. After the initial filing must you continue to file annually?
A. Yes, those who continue to spend 120 days in the U.S. should file the form each year that they do so.

Oops! This could be the surprise – you are probably wondering why they stated 120 days and not 183! So, let’s take a look at the Substantial Presence Test (SPT) that determines your length of stay over a three-year period. If you generally stay for four months, let’s say, January, February, March 2003 and return in December 2003, that’s 121 days. If you were in the U.S. for the same period in 2002 and in 2001, that’s 183 days using the SPT formula. So actually, if you spend four months there each year for three years, you meet the SPT and should file. Give it a try, I’ve provided an SPT worksheet below.

Q. Must both spouses file, and on separate forms?
A. Yes.

Q. Are the agents at the border crossings familiar with this law?
A. Probably not – but they will be.

Q. Would it be helpful to have copies of the submitted form handy when entering the U.S?
A. Yes, especially if you are selected for additional interrogation. It’s excellent proof of a closer connection to Canada as your primary country of residence.

In summary, I strongly suggest that you continue to file the form each year, if for no other reason than to protect your privilege to reside in the U.S. on a temporary basis, without the possibility of paying U.S. income taxes on your worldwide income. If available, the 2004 form will be published in CSANews, fall or winter edition. You can download it from our website at www.snowbirds.org. It is also available at the CSA meetings in Arizona, Texas, California and Florida. A limited number of forms are available by mail or pick-up from my office in Florida, call me at 1-877-633-4722.

Canadian Calendar
In our fall issue, we will once again provide a complete list of social/sport activities sponsored by Canada Clubs, manufactured and RV communities, churches, etc. taking place throughout the sun belt this winter. If you are involved in organizing these events and would like to have them publicized in the calendar, please let me know by providing the event’s name, location, time, name of the contact and his or her phone number in Canada and the U.S. You can reach me as follows – Bill Leeder, 222 Golf View Drive, Auburndale, Florida 33823-5616; e-mail, leeder@tampabay.rr.com or by phone at 1-877-633-4722.

Year 2003 Substantial Presence Test (SPT) Worksheet

Number of days in the U.S. in 2003
1/3 the number of days in the U.S. in 2002
1/6 the number of days in the U.S. in 2001
Total

If your total is 183 days or more, you and your spouse are required by U.S. law to file the Closer Exception Statement for Aliens (8840) by June 15 of each year. Send it to: Internal Revenue Service Center, Philadelphia, Pa 19255. Don’t forget to make copies and have them in your possession when crossing the border into the U.S. – just in case!