The way I see it, there are some real uncertainties in our future:
- Enough money may not be raised to see the Charter challenge through to completion.
- The Charter challenge may not win.
- The Canadian government may cede even more to the US and stop what little protection Canadians have from IRS collection of taxes and fines.
- Bank may or may not start asking all account holders if born in the U.S.
- Customs officials at border crossings may intensify hassles crossing US border on Canadian passport, or even deny entry.
- Don’t know what further actions the IRS may take to press the FATCA/FBAR/tax return issue.
- Have no way of knowing whether coming to the attention of US State department will put family members at risk of being identified as possible US persons.
- Have no idea of level of communication between US State department, IRS and Canadian banks.
To try to help me see things more clearly, I drew up a list of pros and cons. I’m sure I haven’t thought of all the possible ramifications of each action, since I’m still dithering. At any rate, here’s my list.
Option 1: Do nothing
- Don’t get on US State department radar; therefore don’t get on IRS radar.
- Have no US indicia.
- Bank accounts are under the (current) limit for scanning for US indicia.
- The Canadian government may continue to protect Canadian citizens from IRS collection of taxes and fines.
- If bank identifies as US person, right now still protected from IRS collections.
- Possibility of relinquishment remains open.
- Don’t have to deal with spiteful people at the US consulate.
- Don’t care if ever travel to US again.
- Continued state of stress and anxiety and fear of the unknown future.
- Cannot open new bank accounts in case bank asks for place of birth.
- If bank asks place of birth, have nothing to show why not a US citizen or have a CLN, except verbal ‘reasonable explanation’ which bank may not accept.
- If bank identifies as US person, then bank account info goes to IRS, then on IRS radar.
- Canadian government may continue trend of betraying Canadians and allow IRS to come into Canada for tax/FBAR collection.
- Risk refusal of entry to US on Canadian passport which may negatively impact career.
- Bank may be eager to placate IRS and ask place of birth of all account holders.
- Have to continue signing lottery tickets with spouse’s name.
- Continued worry about selling property and being liable for US capital gains at some future date.
Option 2: Go for backdated relinquishment
- Would have definite answer.
- Risk exposing rest of family to State department, possibly IRS.
- Risk of relinquishment being denied.
- Some consulate officials difficult to deal with – could be very stressful and unpleasant experience.
If relinquishment approved:
- Be free of the US.
- No stress, no anxiety, no fear of the future.
- Could travel to US on Canadian passport (therefore no negative impact on career).
- Have to carry CLN when travelling to US.
- No IRS problems.
- No bank problems, have CLN as proof.
- No impact on taxes re: selling property, TFSA, etc.
If relinquishment denied:
- Greatly increased stress, increased anxiety.
- Will be on State department radar, possibly IRS radar.
- IRS may identify to banks as US citizen.
- Would be at risk for IRS determining non-compliance as ‘wilful’ re: FBARs and tax filing if don’t immediately begin renunciation process.
- If bank asked, would be unable to give ‘reasonable explanation’; may have information sent to IRS.
- Information on joint account with spouse may go to IRS.
- Would be forced to seriously consider renunciation process.
- Unable to sell property (capital gains) or have TFSAs, etc. without considering that IRS may try to force US tax collection and Canadian government might cave.
Option 3: Renounce
- Be free of the US.
- Have CLN to show bank.
- Reduced stress and anxiety (after compliance and renunciation complete).
- Greatly increased stress and anxiety while coming into compliance.
- Probably would have to self-identify as US person to banks.
- Must come into 5 years US tax compliance, with cost of professional assistance.
- Must get past information from banks and file FBARs.
- Joint account information with Canadian spouse goes to the IRS (which means unhappy spouse).
- Likely to be stressful experience at US consulate during renunciation process.
- May be stressful/unpleasant experiences at US border in future.
- Cannot sell property until out of IRS grasp unless willing to pay tax on capital gains.
- May put family on US State department/IRS radar.
If anyone has any other pros and cons and ideas they’d like to share, I’d really like to hear them. I’ve got to stop this dithering some time!