🚨 Canadian Companies Selling into the U.S.— Are You Missing a Crucial U.S. Tax Filing?

If a Canadian corporation sells into the U.S. without any physical presence, it may still benefit from filing a protective U.S. federal tax return— even when no U.S. tax is payable.

Why does this matter?

✅ Protective Filing = Risk Mitigation

Filing a Federal Treaty Return, starts the 3-year IRS statute of limitations. This protects the corporation’s ability to claim deductions in the event of a future audit or due diligence.

✅ Avoiding Permanent Establishment (PE) Risk

Under the Canada-U.S. Treaty, U.S. tax applies only if a Canadian company has a PE in the U.S.— such as a physical location or someone with authority to bind contracts on U.S. soil.

✅ Preparing for Future Due Diligence

Buyers and investors often review past U.S. filings. Even if your company has never owed U.S. tax, protective filings show compliance and can avoid red flags during M&A or expansion.

📅 The deadline for calendar-year filers is June 15. If your Canadian company has U.S. sales exposure and hasn’t filed, catch-up filings are an option as well.

If you'd like to discuss your company's U.S. tax exposure or explore whether a protective filing makes sense, feel free to reach out. I'm happy to help.