Are you targeted by the IRS?
Since early July my riding office has been flooded with calls and letters from worried Canadians across the country seeking information and advice on the new enforcement Initiatives for filing US tax returns and reporting foreign bank accounts (FBARs). Frequently the first question asked is, “Will I be affected by this?” Usually the answer is yes.
The American law allegedly intended to expose wealthy tax evaders, money launderers and the like is unambiguously being applied to ordinary citizens. US tax authorities are boasting of the $2.7 billion collected from 30,000 people world-wide following the 2009 amnesty. With so many billions at stake the Treasury Department is targeting even those Canadians with distant links to the US. Many were unaware they are US citizens and had no knowledge of their obligations to report “offshore” accounts to the Internal Revenue Service.
Consider Susan who came to Canada at the age of 4 months when her Canadian parents completed their graduate studies in the US. She wasn’t aware that she was a US citizen until she applied for her Canadian passport.
Dorothy wrote, “I was born in Canada and have lived here all 55 years of my life. I married a Canadian and we have raised 3 children while building a business…what my husband and I have worked extremely hard for is going to be taken from us…because my mother was an American citizen…the US deems me to be a “US Person”.
Thousands of Americans became Canadian citizens in the decades prior to 1986 when US law did not permit dual citizenship. By swearing allegiance to Canada they believed they were renouncing their US citizenship. Not so. According to a recent communication from the US citizenship office one remains a US Person unless they possess a Certificate of Loss of Nationality of the United States issued by the Department of State.
Probably the most stressed are the seniors who write to me. Most had no idea they had filing obligations in the US. Some attempted to comply, but the forms are unnecessarily complicated, so they gave up. Many, feeling pressured by the deadline, registered under the voluntary amnesty. They tell me they expected reduced penalties for “reasonable cause” only to learn that ignorance is not an acceptable excuse and now face paying as much as 25% of their savings to the IRS.
Many more Canadians who share joints accounts with dual citizen spouses are in violation and must disclose their financial information to the Americans. They, too, will be subjected to the penalties imposed on their partners.
Margaret Wente writes humorously of her plight in the Globe and Mail (September 20, 2011) but her fear and paranoia are very real and shared by tens of thousands of others. All of these honest, hardworking Canadians are threatened with onerous financial penalties for failing to file and disclose their bank accounts to the IRS – even when they have been fully compliant with Canadian tax law.
I’m hearing the phrase “no taxation without representation” a lot lately. Those who attended primary school in the US will remember this as the cry that went up when the British imposed unfair taxes on American colonists and ultimately led to their war of independence. The Americans have ignored our international trade agreement when it suits them, and now, in defiance of our reciprocal tax treaty, are coming after our savings and retirement security. It’s time for our government to stand up and say ‘enough is enough’.
Alex Atamanenko is the MP for BC Southern Interiror.