As we expected, more articles ( here and here ) are appearing as FATCA nears, a mere week from today. By passing the IGA in time for FATCA’s debut, the Canadian government not only managed to cow-tow just in time, it managed to screw it’s duals/Accidentals a little tighter as the span to comply shortened. The IRS did its part beautifully, announcing relaxed opportunities to comply June 18, just two weeks before the deadline. The condor compliance industry must be licking its chops as feeding time begins and now will last and last and last.
Margaret Wente lived in the US until she was 14 so guess what? Tainted with US citizenship and by God, now it’s time to pay!
Welcome to the nightmare of U.S. citizens abroad. There are hundreds of thousands of us in Canada, and millions more worldwide. Most of us are law-abiding people. But the U.S. government is treating us like tax cheats. It also says that any “U.S. person” (meaning anyone born in the United States, or even anyone with American parents) must keep filing U.S. tax returns, forever – or else.
This news has come as a nasty shock. Take the case of Carol Tapanila, a former American who lives in Calgary. Her developmentally disabled son, now an adult, is also deemed to be American, even though he was born in Canada. As she put it in an interview with the CBC, “he’s entrapped.” Trying to figure out how to comply with U.S. tax laws has already cost her tens of thousands of dollars, and she’s had to pay taxes on her son’s disability savings plan, which the U.S. government has called an “offshore trust.”
When I first heard about this stuff a couple of years ago, I thought it was a paranoid fantasy. But it was for real. When I wrote about my own dilemma about whether to comply, I was inundated with e-mails from terrified little old ladies who were afraid they’d be arrested at the border on their way to Florida. They won’t be. But the truth is bad enough. Even though the IRS has now promised not to treat them like criminals, simply complying with the law can cost thousands of dollars. On top of that, some people have been on the hook for taxes on assets that are tax-free in Canada. Plus, all the assets you hold jointly with your spouse have to be reported as if you owned them all.
The only way out is to formally renounce your U.S. citizenship – a serious and expensive business. “People really need to extricate themselves,” John Richardson, a Toronto lawyer who’s an expert on citizenship and taxation, told me in an interview.
The entire article is here.