A reader submitted this letter to me (UPDATE: Late Loyalist has now renounced his United States citizenship):
Dear Mr. Flaherty
I’m one of those Canadians with dual US Citizenship. My family moved from Minnesota to Manitoba in 1975. I was 13 years old at that time. My Dad had been an unemployed teacher for the previous 4 years. As a last resort he decided to apply for a teaching job in Manitoba. After all Manitoba is lot like Minnesota right–well the snow and -40 maybe. Wouldn’t you know, he got the job right away. We drove to Winnipeg in a snowstorm and he had the job 20 minutes after we got there. He taught for another 15 years and retired in Dauphin. My parents left everything and the result was a better life. In 1980 all our family member became Canadians, no question.
Now I’m 50 years old. Canada has given me 6 years of post-secondary education, a great job and much more . My wife and I with our two daughters really enjoy Calgary and our community. My work is great, the schools are good and we even get to holiday in BC occasionally. We have a ‘good life’ and we’re very thankful for all our blessings that we have and we can share with others. You might say we live the middle class dream to some extent. But no one told me at age 13 I had to file US taxes and the FBAR. We got this news a week after getting back from our summer holiday in Minnesota this year. I had two weeks to learn all I could and chose to get into the OVDI. The result, a 20K+ lawyer fee from a Tax Lawyer/Accounting firm that handled my case just so I could pay a $1589.00 penalty to the IRS for not filing the FBAR and to be told I owed $0 US income tax. If this hasn’t made you angry yet read on.
The worst of this is that the FBAR penalty is calculated on the highest cumulative value for the 8 years from 2003 to 2010. This means that for 2010 that our joint chequing account equaled $31,775.00 at one single point. The value was based on a $20,000 inheritance from my ‘Canadian’ Wife’s ‘Canadian’ Father who farmed all his life in Manitoba. That’s it, most of the penalty is based on Canadian money that already had tax paid on in Canada. Because this $20,000 was deposited in our ‘joint’ account it had to be recorded on the FBAR. My wife finally gets it–she sees the IRS and the US Government for what they are and now she’s really angry. Our Federal Government, Parliament, needs to step-up and fight for Canadians like me. For me there is only one course of action, when I get my ‘closure letter’ from the IRS I’ll make my visit to the US consulate here in Calgary to start a process I should have started a long time ago.
Understand, I ask for nothing special from my ‘Canadian Federal Government’. I made a choice to get smart and certain legal advice and service. The firm that worked on my case has been great, no complaints. Even after I pay the bill, from the equity in my home, I know I have had outstanding service.
I apologize for the angry tone of this letter. It’s not my intent to attack any Canadians, all I’m looking for is action. Real, visible, no backing down, in your face action with the US Government and the IRS.
The Late Loyalist
I think this captures the sentiments of most us on this site. Thank you for sharing such an eloquent and heartfelt letter.
Wow. If ever there was a good rationale for going nowhere near the IRS, this is it. It disturbs me even more that his professional advisers got him to do this.
I wonder if Flaherty and the rest of them are taking in the fact that the payments he made to the IRS are not just theft from him, but theft from Canada. That money is no longer in this country giving any benefit to Canada’s economy, it now resides in the US giving benefit to that economy. That is outrageous.
@ Petros and “letter from a reader”
The letter is right on the mark for so many of us who are on this blog.
I wrote this past weekend to Prime Minister Harper, James Flaherty and my member of Parliament, Andrew Saxton. I have had simple confirmation from the Prime Minister’s office stating they received my letter.
It is important that all of us write to our members of Parliament.
I agree. After reading that letter why would anyone (except a whale) want to go through “Voluntary Disclosure”. It is so obvious the writer of the letter had “reasonable cause” for ommitting to file tax returns, nor information forms such as, FBAR’s (after all, how could someone living here since he was 13 expect to know he had this obligation), and yet he paid a penalty and $20K + in professional fees.
I certainly hope our government does realize this is both a theft from a citizen of Canada but also from all Canadians.
Arrow, you took the words right out of my mouth. That was my exact reaction–with a few extra choice words which I probably can’t use here.
That Canadian was robbed by the US–and so was his Canadian wife. I worry he may also have been robbed by the tax lawyers and accountants, although he is happy with the service he received. Because he became Canadian in 1980, would he be in the group of us who believed we had renounced or relinquished when we became Canadian citizens?
Those of us in that group do really need to get some good legal advice as to how to prove we are NOT US citizens without having to formally relinquish and get ourselves back in the US system.
I wonder if Late Loyalist knows his Canadian-born daughters are Accidental Americans and are also affected by this. I don’t want to be the one to tell him.
I hope Late Loyalist sent a copy to members of the Opposition–including Bob Rae (Liberal), Don Davies and Hoang Mai (both NDP) and Elizabeth May (Green Party). Elizabeth May herself is caught up in this because she was born in US. She has been a Canadian citizen since late 1970s.
@Blaze – I don’t think the Canadian born daughters would be accidental Americans if he moved to Canada when he was 13.
“Children born to one citizen parent and one foreign national will obtain citizenship at birth if the citizen parent resided in the US for five years before the birth, with two of those years after the age of 14. The child does not need to take any special action to retain US citizenship.”
@toomuchcoffee: Thanks for reminding me of the facts. Hope I didn’t alarm or confuse anyone.
Oh, no problem. I’m still worried that I’ve misunderstood the rules in some way, and that I’ll find my kids *are* accidental Americans (I left the U.S. when I was 13 months old, so I don’t see how they could be. But I don’t feel like I ever really know for sure).
A comment to Petros,
I too have written those gentlemen, and Andrew Saxton is my MP as well. I have not heard from Harper because he just forwards it to Flaherty but I have heard from Mr. Flaherty twice. In regards to Andrew Saxton, I have called him, faxed him, and written 3 letters and have not heard a darn thing. The man is absolutely USELESS! If you receive a response from him I would love to know. Thank you.
@TooMuchCoffee: You’re wise not to trust what US says about citizenship of your kids.
Many of us were told by US 40, 50 or even 60 years ago we were renouncing our US citizenship by becoming Canadian. I was strongly counseled by US to consider this because my decision was permanent and irreversible. I and others took our oath to Canada with the full knowledge and intent that our action was legal, binding and final termination of our US citizenship.
Now that their country is broke and we have some savings and assets for our retirement, US has suddenly changed its mind without our knowledge or consent If they can get away with this for us, who knows what they will do to others when it suits them.
@Blaze, you had asked about renouncing US citizenship when Canadian citizenship was obtained. The Citizenship Act was revised on Feb. 15, 1977. Before this, dual citizenship was not normally allowed by Canada and US citizens were required to renounce US citizenship in order to become Canadians. Renunciation was not required after this date.
It is important to understand that the US has no idea that you had renounced and they would still view you as an American. In their jargon, you had committed an expatriating act and they should allow you to relinquish US citizenship based on this, effective on the date of your renouncement. After Feb. 15, 1977, since renunciation was not required, no expatriating would have been committed.
By the way, I am in a nearly identical situation as The Late Loyalist and am currently collecting documentation in order to relinquish US citizenship since I renounced in 1971 and *great big grateful smile*, therefore, committed an expatriating act.
Bruce: “After Feb. 15, 1977, since renunciation was not required, no expatriating would have been committed.”
I think becoming a Canadian citizen is in and of itself an expatriating act if that is the person’s intention. Whether they did it before 1977 or after doesn’t seem to matter.
Read the story of a woman named Joan who became a Canadian citizen on July 4, 1985 and can seek formal recognition that she relinquished her US citizenship as of that date and not have to file tax returns or FBARs:
@Bruce and OMG: Thank for the info. My major point is I phoned the US Consulate and was clearly and firmly told by them I was renouncing my US citizenship by becoming a Canadian citizen. There was no question in my mind that it was legal, binding and final.
I was surprised when Canadian citizenship judge told me I would meet with someone from Consulate before my ceremony. That rep from US Consulate again stressed this was permanent and irreversible. I have no idea how he knew I was becoming Canadian that day. I’ve always assumed there was some sort of agreement between the two countries to inform, but that doesn’t seem to have happened to anyone else. I did sign a document with him, which I have always believed was to renounce.
OMG, once I have documents from my CIC Immigration file, I will contact the lawyer on the Accidental website or I will contact another lawyer.
Thanks everyone for your help.
The unfortunate fact is, misleading advice is easier to come by than factual information, especially when one is in ‘panic’ mode.
I thank god that the OVDI was not available when I became aware of my IRS obligations. If it was, I am sure that the “Professionals” that I spoke to would have convinced me to enter this “program”….and I might have done just that….but I didn’t.
The Government of Canada will not take any responsibility for the actions we take on our own in an effort to comply….but I agree that they do have a part to play when it comes to the protection of there Citizens and Permanent residents from a foreign government.
Now that the OVDI for 2012 is in full swing again, we will no doubt be hearing the “Dear Mr. Flaherty” story all over again as people are convinced the only way to cleanse there souls is to follow the white lights of VDP.
IMO both governments should have dealt with the “minnow” situation BEFORE they recessitated the VDP.
Shame on them.
I would like to know how many individuals just went ahead and filed there 6 years of returns and FBARs (something that I do not classify as a QC but rather a DelinQUIET filing)…please don’t get me started on the definitions again:)
It has been 3 months since I filed…haven’t heard a peep as of yet…..
@Blaze – I came to Canada at age 13 as a land & immigrant. The age cut off for my daughters automatically becoming US citizens is 14 in 1975. I’ve had this confirmed by a tax lawyer, Immigration layer and the Consul the day I renounced. The important thing is they have a Canadian birth place.
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