Questions to Ask Cross-Border Lawyers and Accountants

Over at Brock, Wondering has put forward several excellent questions to ask cross-border lawyers or accountants before doing anything.

If you are a Canadian citizen considering engaging ANY cross-border lawyer or accountant, ask these questions at the initial conversation:

1) If I do not choose to comply with US extra-jurisdictional tax claims, what is the specific mechanism by which they will collect a tax claim from me using Canadian courts and laws? Can the US or any other foreign state garnishee my Canadian wages? Can they seize my Canadian bank accounts?

2) I understand that under the Canada–US Tax Treaty, Canada will not assist in collecting US taxes from any Canadian citizen, unless the tax claim proceeded their becoming a Canadian. How does this protection apply to my situation? Am I protected by this Treaty?

3) Do you know of any specific case where a Canadian court enforced a US personal tax claim or penalty against a Canadian citizen in Canada? When, where and who?

4) Do you know of any specific case where a Canadian citizen was detained the the US border because they had not filed US tax forms? When, where and who?

5) Are you prevented by any US law, professional certification, official registration or similar covenant with any US government agency from giving me full and frank advice?

I personally will not go anywhere near the cross-border folks. I already know the answers to most of the questions. My lawyer and my accountant agree with me that I have no obligation to do anything with the IRS.

If the cross-border specialist is honest, the answers should be:

1. There is no mechanism by which the IRS can collect tax claims in Canadian courts, The US cannot garnishee your Canadian income. The US cannot seize funds in your Canadian bank account.

2. If you are a Canadian citizen, CRA will not assist in collecting U.S. taxes–even if you are also an American citizen.

3. There is no known case of a Canadian court enforcing a U.S. tax or penalty against a Canadian citizen.

4. There are no reports of Canadian citizens being detained at the U.S. border because they had not filed U.S. tax forms.

5. Full and frank advice is greatly lacking from those in the cross-border compliance industry who are trying to suck Canadians in.

Don’t let IRS or the cross-border condors terrorize you. Know your rights before you do anything.

49 thoughts on “Questions to Ask Cross-Border Lawyers and Accountants

  1. Shannon

    What are your thoughts if my mother recently renounced her citizenship and also gave my personal info to her bank- who is aware that she was a us citizen? I recently got a letter From my pension plan asking about my citizenship. I said ‘no’ I am not a citizen of the us because I honestly didn’t think I was.

    I’m in the same boat as Bill McCaslan- this plague of ‘us citizenship’ was passed down to me through my mom. Just like birth-induced Chlamydia. I have never had a us passport and have no SSN.

    Reply
    1. nobledreamer-Tricia

      Strange that your Mom would give your personal information to her bank. Do you have an account there? Is there a direct connection between her disclosure of your information to her (your?) bank and the letter from your pension plan?

      You might consider that it is possible that you are not a US citizen; your Mother would have to meet certain residence or physical presence requirements in the United States or an outlying possession prior to the person’s birth. You can check the two sources below; the law that was in effect at the time of your birth applies.

      https://fam.state.gov/FAM/07FAM/07FAM1130.html
      https://www.uscis.gov/policymanual/HTML/PolicyManual-Volume12-PartH-Chapter3.html#S-A

      If you were not born in the United States, you might read up on how some view whether or not a birth abroad makes one “automatically” a US citizen.
      http://isaacbrocksociety.ca/2017/10/25/us-expats-given-hope-of-lower-tax-bills/comment-page-3/#comment-8036297

    2. Shannon

      Hi Tricia,

      I don’t know if there is a connection between my mother’s financial institution and my pension plan, but if there is, I don’t know about it. As far as I know they are separate entities. I have no involvement with that bank whatsoever.

      I found it concerning that I received the letter shortly after my mom began banking with that institution. I don’t know why she chose to tell them that information when they asked – But now it’s done and I can’t do anything about that.

      My mother does meet the residency requirements that would make me a US citizen if I wanted to be one, which I don’t. However, she was moving around a lot at that time In her life and me proving that she resided there is going to be a huge pain in my ass if I do have to somehow prove that I’m a citizen so that I can then completely cut ties with America.

      I believe that US citizenship should be elective in my current situation. I am very happy being a Canadian citizen and see no reason or benefit in being American or viewed as American. Amercian citizenship feels a lot like some guy sideling up and Telling me I’m his wife, and so I have to prove I’m a wife of his so that I can then divorce him. Where is there consent? So ridiculous.

      Do you think public school teaching would be considered a government job? I have a tiny hope that maybe this could be used to relinquish my unwanted citizenship with the states. I am worried I can’t hide due to my mother’s disclosure to the bank. I can hardly afford renouncing (financially, emotionally or logistically). 🙁

    3. nobledreamer-Tricia

      Hi Shannon,

      If you have no account at your Mother’s bank, it is likely there is no connection between her telling that bank you “are a U.S. citizen” and the letter from your pension. FATCA is extremely pervasive. In the second year of reporting, banks extended their search for U.S. Persons via entities (i.e., all corporations etc that have accounts at their bank). Your pension plan is probably asking due to that.

      Were you born in Canada? You mentioned no SSN and no passport and I presume, never voted in a U.S. election. As long as your mother did not register your birth with the U.S. Consulate, there is nothing to suggest they have any record of you. Many in your situation are doing absolutely nothing because they don’t expect to be found. And/or are waiting to see if there is anything in the expected tax reform that will end this situation for Accidentals. Have you replied to your pension plan that you are a U.S. citizen? Hopefully not yet………..

      I do not know if public school teacher would be considered enough of a government position to qualify for a relinquishment but in a sense, that may not matter. If you were born in Canada and are dual, there is no relinquishing act/it’s not easy. There is a person at Brock who has a lot of experience with this particular area and I would suggest you go to http://isaacbrocksociety.ca/renunciation/ and direct your question to Pacifica. She may see it here but there are lots of other folks in your situation and you might benefit from reading up on what they are doing. Relinquishing costs exactly the same as renouncing (unless you can backdate a relinquishing act prior go June 2004 but again, if you are born in Canada, this is not so likely a possibility as I understand it. Renunciation is a clean break which they cannot refuse as long as you understand the consequences and are not being coerced in any way should you need to go that route.

    4. Shannon

      Thanks for getting back to me Tricia. I appreciate all of the information you have shared with me. This whole thing is very confusing and overwhelming. I’m having difficulty thinking clearly because this is so crazy. I will look up Pacifica and share my situation with her.

    5. nobledreamer-Tricia

      You’re very welcome. I hope you are able to come up with a solution that works for you that causes the least amount of grief. Would be great if you keep in touch so we can know how you are………….

    6. Duke of Devon

      Shannon. Don’t do anything more. You told your pension plan that you were not a US citizen. That is all you have to do. You will be joining tens of thousands around the world pursuing the same course.

    7. Pacifica777

      @ Shannon,

      (1) Staying Under the Radar:

      Duke of Devon and Tricia have raised a good point that you may do just fine doing nothing about this, as you have a Canadian place of birth.

      The banks seem to be doing what they have to – but nothing more than what they have to – in complying with FATCA, and the indicators they must look for don’t include parentage. (Canada-US FATCA IGA, Annex I, II, (B)(D), p. 20-23).

      I noted also that in the CRA’s guidance to the financial institutions, CRA stated that “financial institutions are not expected to be experts in U.S. nationality law”. (CRA Guidance on the Canada-U.S. Enhanced Tax Information Exchange Agreement, s. 8.33). Although this section of the Guidance Note is on the issue of the citizenship of persons who relinquished their citizenship via a relinquishing act performed prior to 2004, determining citizenship by parentage is also not a cut-and-dried matter. I doubt the financial institutions will do any more than the check for the 7 criteria required by the IGA (p. 20).

      I think the letter from your pension fund was a coincidence, as the pension fund and the bank are not related. Some financial institutions have been sending FATCA letters/questionnaires to everyone – my husband got one about six months ago from his bank and it appeared they were routinely sending them to all their business account clients.

      *****

      Canada-US FATCA IGA https://www.fin.gc.ca/treaties-conventions/pdf/FATCA-eng.pdf

      CRA Guidance on the Canada-U.S. Enhanced Tax Information Exchange
      Agreementhttps://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/enhanced-financial-account-information-reporting/reporting-sharing-financial-account-information-united-states/guidance-on-canada-s-enhanced-tax-information-exchange-agreement.html#_Toc475612220

      *****

      (2) Relinquishment:

      We are aware at Brock of people receiving relinquishment based CLNs based on provincial and municipal employment (as well as federal), as these are considered subdivisions of the foreign state’s government (s. 349(a)(4)(A) Immigration and Nationality Act).

      There’s only been a few provincial-based relinquishments we know of, but all of these were accepted. Offhand I don’t recall a teacher, but I do recall that one of these was a person who worked in a hospital. (see links below).

      They generally don’t ask many questions at the consulate/embassy, sometimes none. But in the case of government employment, they seem to always ask how did you know at the time that you could lose your citizenship by doing that? It hasn’t mattered if the person was warned by their employer (one relinquisher reported that the fed govt had warned him) or if the person learned this by word-of-mouth (as several people had), or some other means, but that you were aware of this at the time is very important.

      *****

      Immigration and Nationality Act, s. 349(a)(4)(A)https://www.law.cornell.edu/uscode/text/8/1481
      ” . . . accepting, serving in, or performing the duties of any office, post, or employment under the government of a foreign state or a political subdivision thereof, after attaining the age of eighteen years if he has or acquires the nationality of such foreign state . . .”

      Here’s some links from the Isaac Brock Society site that may be of particular interest to you.

      Relinquishment of US Citizenship by Persons Born Dual or Who Naturalised in a Foreign Country as a Minor: http://isaacbrocksociety.ca/2014/03/20/relinquishment-of-us-citizenship-by-persons-born-dual-or-who-naturalised-in-a-foreign-country-as-a-minor/

      Reports by Persons who Relinquished US Citizenship Upon Taking Government Employment, Immigration and Natoinality Act, s. 349(a)(4)(A). http://isaacbrocksociety.ca/wp-content/uploads/2015/09/Section-349.a.4.A-reports.2015.08.pdf

      Consulate Report Directory: http://isaacbrocksociety.ca/consulate2/

      *****

      (3) Conclusion

      So, I think it sounds likely you’ll be fine staying under the radar. Nevertheless, it’s really good to be aware all one’s options, as it’s definitely not a one-size-fits-all matter.

  2. Bill McCaslan

    For context, I’m a Canadian born son of an American expat mother, have never lived, worked or had accounts or assets in the US. My net worth would be well under a million, my income will likely never get as high as $90k. I’m married to a Canadian with no US ties.

    I have a long expired US passport, renewed once decades ago.

    It appears I’m trapped in this nightmare. I’m hoping someone can help me with 2 questions.

    1) Would the IRS allege any claim on my house or the proceeds should we ever sell it?

    2) Are there any resources out there to help me do the paperwork to file myself if file I must? Even trying to figure out from the IRS website what forms need to be done makes my eyes glaze over. My income tax situation is fairly straightforward.

    Would greatly appreciate any help, this is causing me a great deal of stress.

    Reply
    1. WhiteKat

      I am no lawyer or accountant, but I am a US born US person, so am familiar with your issues. In my opinion (and no doubt the opinion of MANY others) you need to step back a bit and ask the question, “How likely will I get into any trouble due to my US personhood since I have a Canadian birth certificate?” Basically, the answer is ‘not very’ if you ask me.

      If your Canadian bank inquires as to your US status, you tell them you are NOT one, and if they ask for proof, you show them your Canadian birth certificate. This is all you need to do unless for some reason YOU let the cat out of the bag in which case I would suggest switching to a new financial institution. Avoiding letting your bank in on your little secret will allow you to avoid FATCA reporting which in turn will allow you to avoid any nasty FATCA letters from the IRS.

      There is no reason for you to jump up and say, ‘here I am’ to the IRS or to FINCEN which will be happy to take your tax returns and FBARS (and associated taxes and penalties) if you volunteer your US status and Canadian financial information, as they are unlikely to ever find out anything about you otherwise.

      In my opinion, it is highly unlikely, bordering on extreme paranoia for anyone to think that there will be any searching by either Canadian or American governments into the lineage of Canadians to ascertain which Canadians have an American parent and might therefore be ‘US persons’.

      Most of us ‘born in the USA’ Canadians WISH we were in your situation, as we are hiding out in plain view with our US birth certificates (but we are not showing them to our Canadian banks). Even then I still think that as long as we keep our birth places a secret (i.e. LIE if we must), even the US born Canadians (at least those without economic ties to USA) can stay safe indefinitely, or at least long enough for this FATCA fiasco to die down. You, with your Canadian birth place are one of the luckier US persons, if there is such a thing as a lucky US person that is.

    2. Lynne Swansoni Post author

      @Bill: Welcome to Sandbox. You are among friends.

      I agree with White Kat’s advice. You were born in Canada. The IRS does not know about you. Do not put yourself in their sightlines.

      Do not allow yourself to be terrorized by a foreign bully with the help of your Canadian government or the compliance vultures. If you do speak to a professional accountant or lawyer, be sure to ask them the questions posted in this thread–and be sure their answers are honest.

      To answer your specific questions:

      1.  IRS may try to claim capital gains tax on a sale of your house if the capital gains is over $250,000.  However, this would only happen if you tell the IRS about it.  My advice is Don’t tell the IRS anything.

      2.  I personally do not know where you can find information on self-filing. Again, I recommend no filing.

      If you choose to file with the IRS, you will be living this nightmare for the rest of your life.  

      Everyone needs to do whatever will give them the most peace of mind.  I know of two sisters who have been in Canada for over 40 years.  Both were married to Canadian citizens.  Both are Canadian citizens themselves.

      Neither of them knew about the IRS issue until a few years ago.  One filed with the IRS because she couldn’t sleep if she didn’t.  Her sister did not file with the IRS because she said she wouldn’t sleep if she did.

      The compliance vultures and the IRS do not want you to sleep. That is how they rope you in with their threats and bullying. Don’t let them control your life.

    3. Lynne Swanson Post author

      P.S. Even if you do file with the IRS, if they ever try to make any claim against your income or sale of your home or to levy penalties for failure to declare Canadian accounts or assets, Canada a Revenue Agency will not collect for IRS.  To date, Canadian courts will not enforce American tax laws or attempts of the IRS claim funds from Canadians in Canada.

      Therefore, IRS has no means of collecting anything from you.

      End the nightmare. Sleep well. And please consider donating to the fund for our legal challenge to FATCA in Canada.

    4. Duke of Devon

      Another vote to do nothing. Hundreds of thousands around the world take this approach. The Infernal revenue society only has resources to chase whales and minnows who jump into the net. Don’t volunteer to be collateral damage.

      As an Irismman would say ‘I tell them feckin nothing’ or as Dan would say only tell them what they already know. Good luck.

    5. Bill McCaslan

      My only concern is the expired US passport, which I obtained long ago as a means of cementing ties to my US family. I had a higher opinion of the US then. It puts me on their radar to some point. If not for that I wouldn’t give it a moment’s thought.

      Anybody have any thoughts on whether that long expired passport may come back to bite me?

    6. WhiteKat

      Hi Bill,

      No offence, but you make me feel way less paranoid about my own situation, or is that way more paranoid?

      Relax. That long expired US passport is highly unlikely to make any difference to you as a Canadian living in Canada with a CANADIAN birth place. Your bank will NEVER have enough ammunition to report you (unless you tell them your secret) and the USA is not going to search through decades old US passports to find you or anyone else.

      You should would worry even LESS, if you never had a SSN. Do you have a SSN Bill?

    7. Lynne Swanson Post author

      i agree with White Kat again Bill.  IRS and passport systems are not connected yet. IRS does not have any record of you. Even when the two systems become inter-connected, US Department of State will not likely dig out passport records from decades ago to turn over to IRS.

      Department of State does not likely care about you. They may not even still have a record of your long-ago passport.  If they do, they are not going to go searching through archaic files to find a passport of some guy born in Canada. They don’t have the interest or resources to do that.  

      Celebrate your Canadian place of birth. If you cross the border, give them your Canadian passport with a Canadian birthplace. If the border guard asks your citizenship, you honestly reply Canadian.  End of story.

      Don’t give IRS a reason to try to claim you. Live your life as a Canadian only. Stay away from the Compliance Condors who want to feast on you. Sleep well.

       

       

  3. Al

    Lynne, I’m Not a covered expat. Are their any FATCA amendments for 2015-2016 that may be news . For instance can we stop filing the FBAR?!
    I know, wishful thinking right?

    Reply
  4. Al

    If their is a cost of $ 2350.to renounce citizenship, Do you also need an attorney to represent you?, if so what are the legal fees? I assume that if you are compliant for 5 years, your not worth more than $ 2 million U.S., and you owed 0 dollars for five years, that you are free? Is your net worth exit fee cut off $4 million U.S. if you are married? Thanks.

    Reply
    1. Lynne Swanson Post author

      You do not need a lawyer to go to a U.S. Consulate to renounce.  If you think you may be over the amount to be a covered expatriate, consulting a lawyer would be a good idea.

      As I mentioned earlier, the situation of your family appears complex. For that reason, you may want to consult John Richardson at  citizenshipsolutions.ca.  I don’t know what his fees are.

      John is not part of the compliance industry. His purpose is to help people deal with this whole nightmare.

  5. Lynne Swanson Post author

    @BC Doc: I remember Arctic Greyling reporting that a friend traveled 17 hours by bus to a Consulate. Even though he had an appointment, for some reason, they told him to come back on another day.

    I don’t know if he went back or what the eventual outcome was.

    We haven’t heard from Arctic Greying for a long time. He renounced at a Consulate in South America, but I don’t remember which country.

    I know someone else who flew from London Ontario to Calgary to relinquish because the wait time for an appointment in Toronto was way too long. In the long run, he saved money because if he had waited for a Toronto appointment, he would have been required to pay the $2350US fee.

    Reply

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