Canadian Gambling Tax Refunds and the US Government Shutdown
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While the New Year is normally accompanied by the imminent opening of a new tax season, the current shutdown of the US government raises questions and both Americans and foreigners waiting to file in the USA having growing concerns. What do we know about the effects of this shutdown, and what will be the consequences for Canadians seeking to recover taxes paid on casino winnings in 2018 or before?
While the release of the US resident tax return form has not been delayed, we are still waiting for form 1040NR; the one for foreigners filing. The IRS, despite its much reduced work staff, said it wanted to minimize delays in making all of these forms available. With only one in eight employees currently working at the IRS, it would be foolish to think that it will be a year like any other if the government shutdown were to continue.
So there is this first step of getting this form to be able to file a claim to get a refund on taxes paid on gambling winnings, and then its processing by the IRS. The truth is that the IRS' contingency plan for the government's shutdown only covered the end of 2018. To date, it has not been updated. There are therefore more questions than answers for the future.
The IRS normally starts processing US applications at the end of January, while in 2018, the season for foreign residents began in mid-February. If the government's shutdown does not continue beyond the first half of January, then the ultimate effects could be quite modest. Without expressing a political opinion on the subject, it is obviously the scenario that we wish for our clients.
On the American side, since the tax forms are already available, it will remain possible, for an American citizen, to send his tax return, government open or not. Electronic processing may already begin, while few employees are needed to insure it. Forget refunds until the government is reopened, however. If this is true for Americans, you can imagine that this is the case for foreign citizens as well.
All Canadian casino or lottery winners with a current IRS application will also have to struggle with additional delays.
If the shutdown of the government were to continue, it is not impossible that employees be forced to return to work, without immediate pay. We will have to wait for the next IRS update regarding their contingency plan to learn more about this.
Certainly, the problems caused by this shutdown will be directly proportional to its duration. The other certainty is that if you owe money to the US tax authorities, the deadline of April 15th 2019 will not be postponed.
Regarding the activities of GamblingTaxes.ca, we continue to prepare the files of all our clients, just waiting for the last form required to finalize the process. Our team will work hard from the publication of the 2018 1040NR so that our customers are again this year in the first wave of customers reimbursed. If these refunds were to be delayed by a prolonged government closure, we will make sure that we do not create any further delays in order to make the refunds of our customers as fast as the American reality will allow.
You won a taxed prize at a casino in the United States? We remind you that we offer you a turnkey solution to recover this money without having to contact the IRS yourself! Just start the process by filling out this contact form.