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.