10 thoughts on “Canadian Grandma Pays $93,000 to IRS

  1. Duke of Devon

    maz57 I agree that is probably what happened. Problem is if you go to an accountant with any US connections- most of them- they are obliged to follow US rules on US assets.

    Most people don’t know that if your estate has more than 60K in US assets, the big accounting firms will feel obliged to file a US estate tax return. (Suppose you were lucky enough to have bought a few Apple shares years ago)

    Most people won’t owe estate taxes but the cost of filing could easily be 5-10 thou and the estate tax form is very intrusive. (copy of the will, and on and on and on.)

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  2. maz57

    Stories like this make my blood boil. Hopefully it’ll raise the temperature of a few other Canadians’ blood as well. If this isn’t a glaring example of what is wrong with CBT and FATCA then I don’t know what will wake the general public up.

    Unfortunately the article is woefully short on facts. If her husband wasn’t a US citizen nothing would be owed to the US, regardless what her status might be. Perhaps she sold some US real estate after her husband’s death? The process by which she found herself in this mess is probably a combination of overzealous compliance condors and a very naive newly widowed woman. Many older women find themselves “in over their heads” upon the death of the husband who previously handled most of the financial affairs. As we on IBS and Maple Sandbox have seen, only individual due diligence can protect against unscrupulous lawyers and accounts.

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  3. John Canuck

    The article is lacking in detail, but it sounds like this woman got some bad advice. Was this income tax? Capital gains tax? Estate tax? I’d tell the IRS to pound sand-they have no jurisdiction in Canada to collect, and CRA won’t assist them IF she is a dual citizen.

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  4. Lynne Swanson Post author

    I don’t know what the details are in this specific story, but I know personally of an elderly widow where Canada Trust and Price Waterhouse instilled terror in an elderly widow who has been a Canadian citizen since 1972.

    By the time I spoke to her, she was in such a state of terror, she was well on the way to becoming compliant.

    CT and Pw did not tell her she relinquished in 1974–even though that was what she believed until they became involved–and did not bother to tell her that CRA will not collect for IRS.

    Instead, they convinced her she could be subject to criminal prosecution.

    I don’t know if that is what happened to the woman in the Global story or not.

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  5. Duke of Devon

    She said her husband wasn’t American and she gave up her US citizenship after this happened. I think you are incorrect about the estate tax lifetime exemption. The story makes very little sense.

    As to Canadians being extradited for tax debts – please be serious.

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  6. JC

    She says she gave up her US citizenship. If there is an estate going from a US citizen to nonUS citizen then the exemption level is much lower than you indicate, more along the $US650K region then the US wants 40% above this. To pay the 40% some liquidation of assets may have been involved which may be where she paid the CRA on gains. To get the $5 million exemption as if the survivor was a US Person, the assets would need to be put into a QDOT trust with a US financial institution. She might have had this option yet this involves its own layer of complexity and compliance and the US would want a 40% cut of the QDOT upon death of the surviving spouse. (like a lot of aspects of CBT, it is worse than it sounds).

    Was the husband compliant prior to death? Then this is where the compliant condor may have landed.

    More stories like this would help highlight how the Canadian-US tax treaty does not protect against double taxation. Berg insists it is U.S. law, yet where is the Canadian government in all this to shield and protect and advocate for Canadians?

    What would have happened if this person said that they were not paying US estate tax? They may also decide not to visit the U.S. again. Somewhere along the line they were sent to the compliance industry who provided services for a fee to sort out the mess. Any stories of Canadians being extradited for U.S. tax debts?

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  7. Duke of Devon

    Duke of Devon says
    September 8, 2014 at 9:50 pm
    The Global news story doesn’t add up. FATCA reporting hasn’t begun. It certainly hadn’t begun when this lady filed estate taxes, if that’s what she in fact paid. There isn’t enough info to know what or why she paid.
    It is more likely that she ran afoul of a compliance condor who advised her to file something in the US.
    However, if her husband were solely Canadian then AFAIK, there would be no estate tax due to the US because estate taxes in the US are paid by the Estate not the heir. There is also a 5 million lifetime exemption.
    Perhaps the estate had US assets. Who knows? But the Global story doesn’t make sense.

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