Hello Isaac? It’s me, Ladyhawk. Is there anyone here who still has US citizenship? Well, anyway, in case anyone is interested in how things are going for people like me who are still trying to make the dual thing work, I thought I’d tell you what happened when I went to the US Consulate in Toronto to renew my US Passport.
I’ve been in Canada since 1969, took out Canadian citizenship in 2003, and have no plans to renounce or relinquish my US citizenship. I got my first US passport in 1986 and renewed it in 1996. I had to go to the US Consulate in Toronto both times because that’s the way it was done then. Not a big deal since I live about an hour’s drive away. Since then it has become possible to renew passports by mail, unless your passport has expired and it has been more than 15 years since you last renewed. That was the case for me, so I had to appear in person to renew.
Things have changed. The US Consulate in Toronto is still in the same building, but the big wide welcoming doors at the front on University Avenue are closed, and entry to the building is now at the back, through a smaller door where security is simpler. You don’t get into the building unless you have an appointment, and most people who go are there to get a travel visa for the US. Since I was there for a passport, I was escorted past the lines, through a security checkpoint similar to airport security, and up the stairs to the upper floors by a relay of security guards who kept each other informed about who was coming and going. It was swift and efficient.
At the first window, an agent checked and collected my documents (appointment letter, expired passport, application for renewal, passport photo, and self-addressed Express Post envelope). Then I was sent to the next window where I paid the fee, and from there I went into the waiting room. It was open and uncrowded, with a TV screen on the wall tuned to the CBC news. The resident security guard politely asked if any of us had any questions he could answer while we waited. Within 15 minutes I was called to another window.
Here the agent asked me some questions confirming the information on my application. He noted the state in which I was born and asked if I had grown up there. I said yes, and he smiled and said he was from the state next door, so we were practically neighbours. I smiled back and we chatted a bit about life in that part of the country. He noted my travel plans for the summer and assured me I would have my new passport within two weeks, in plenty of time for my next trip outside of Canada. He asked in a very friendly way about why I had waited more than five years after my passport expired to renew it, and I confessed that I had been very busy with work and family concerns, and had simply not gotten around to it. He did not ask if I had dual citizenship. He did not ask any questions about taxes. I was back on the street in less than 45 minutes.
Since everything was in order, I should have my new passport within a fortnight. The only doubt I have is to wonder whether my information will be checked against my tax status, although I did file taxes (but not FBARs) for 2010. No one at the consulate said anything about that. If I receive anything from the IRS requesting more tax information before my passport is issued, I will report it here.
All the people I encountered in the embassy, from the security guards on the sidewalk outside to the officials and clerical staff, were uniformly pleasant, friendly, helpful and competent.
…’unless the tax was incurred prior to that person obtaining Canadian citizenship’ is my understanding — CRA will not collect for Canadian citizens (duals) after their date of becoming a Canadian citizen.
@ Roger,
What you have described is exactly the way I understand it. It would seemingly, be the point that Canada would collect from US citizens in Canada when requested by the US. Below is the Article XXVI A 8
8. No assistance shall be provided under this Article for a revenue claim in respect of a taxpayer to the extent that the taxpayer can demonstrate that
(a) where the taxpayer is an individual, the revenue claim relates to a taxable period in which the taxpayer was a citizen of the requested State, and
(b) where the taxpayer is an entity that is a company, estate or trust, the revenue claim relates to a taxable period in which the taxpayer derived its status as such an entity from the laws in force in therequested State.
@bubblebustin
I don’t believe your lawyer has advised you correctly with regard to taxes, if you are a Canadian citizen. If you are a US citizen and Canadian, then the CRA will not help them collect taxes. And they will not collect FBAR from anyone.
paranoia runs deep. The US cannot go on a fishing trip and say ‘we think joe ex-pat probably , maybe, perhaps, should owe us some money-please help ‘ They would need specific details of the delinquent amount owing, when, and what for. Merely saying Joe expat is a US citizen residing in Canada and must owe us some taxes would not be enough to gain any traction with Rev. can. and would be laughed at.
@bubblebusting,
Previously posted, but you may find this useful:
Summary of a legal article written by Canadian tax lawyers. You need a subscription to read this on-line, but an accountant or tax lawyer could provide a copy, or a law library, or contact the authors’ firm.
The authors are: Erin L. Frew and S. Natasha of Reid Thorsteinssons LLP, Vancouver (leading tax law firm)
RE: US TAX COLLECTION IN CANADA
“US Tax Collection in Canada”, published in “Canadian Tax Highlights” Vol. 19, Number 9, Sept 2011-10-14
Newsletter of the Canadian Tax Foundation.
Article documented the difficulty of enforcing US tax claims in Canada.
The article is about enforcement within the Canadian legal system – in Canada’s jurisdiction. And is no substitute for personalized legal advice.
Basically article notes:
– Canadian courts have not enforced US tax revenue claims in Canada
– Canadian courts also very unlikely to enforce FBAR penality
– Under the Canada-US tax treaty, Canada Revenue Agency cannot collect US taxes from Canadian citizens, unless the tax claim proceeded their date of citizenship.
Final summary paragraph:
“In summary, a Canadian citizen need have little concern about the collection of US tax, interest, and ancillary penalties. However, a US taxpayer who is a Canadian resident and not a Canadian citizen and who owes US tax, interest, and penalties may face collection thereof by the CRA pursuant to treaty article XXVI A. It is extremely unlikely that Canadian citizens or residents will have to face collection of FBAR penalties, except in the very unlikely event that those penalties may be characterized as registrable civil judgments.”
@ bubblebustin,
Sorry, I don’t think I worded that well. Canada will not collect taxes from Canadians for the US. As long as they were Canadians at the time the tax was incurred. Being dual (at that time) is the protection of the CDN govt.
@ chester, Wondering The cited article actually gives no hard information about which cases the IRS has been able to get the CRA to collect on US persons in Canada. In numerous comments Tim has suggested that it never happens to residents, particularly long term residents of Canada, because the United States has no idea who a Canadian citizen is. I notice however in doing my taxes that CRA does ask if you are a Canadian citizen–for what purpose I am not sure, but certainly not so that they know whether to collect US taxes from you.
In other words, a long term resident who unlike me, doesn’t blab his mouth off publicly about when he became a Canadian, has little to worry about, since the IRS is hardly going to go on a million wild goose chases trying to use the CRA to collect nebulous tax claims on people who might accidentally turn out to have Canadian citizenship. I speculate that they reserve this for the whales–and I really do wonder when, if ever, that could happen. It may simply be weapon, to get Canadian residents to file, for fear of the CRA. It would then be analogous to the threat of heavy FBAR penalties to steer people into OVDI.
@Petros
The section where they ask about Canadian citizenship on the T1 is related to voter registration and I believe is only shared with Elections Canada
@Petros. From the CCRA tax guide
“If you check “No” to one or both questions (or do not make a choice)
■ The CRA will not give any of your information to Elections Canada.
■ You will not lose your right to vote.
■ Elections Canada will not remove your information from the Register if it is already there.
■ If there is an election or referendum, your information may not appear or be up to date on electoral lists produced from
the Register and you may not receive a voter information card. In that case, you will have to take the necessary steps to
correct your information or register to vote.”
Filling the citizenship section is optional and is only used to update the voters list..This is an agreement between CCRA and Elections Canada that was cleared by the privacy commissioner.
Compare to some US states who want to disenfranchise the underprivileged who don’t have photo ID on the spurious notion that voter fraud is widespread.
As to your second paragraph…. PRECISELY…. GOT IT IN 1
@nobledreamer
Not only will Canada not collect taxes for IRS against people who were Canadian citizens at the time of the alleged tax liability, under a 2007 reciprocal amendment to the tax treaty, signed by both countries, Canada will not collect taxes for IRS for any period at all for persons who became or were Canadian citizens before November, 1995. No idea why they picked that date, but they did. So the lack of a statute of limitations in the US for certain tax liabilities is not an issue for such persons, even if they were living in Canada for a while before becoming Canadians and didn’t file returns for those pre-citizenship years, Canada won’t collect on any of that as long as your Canadian citizenship pre-dates November 1995.
Same rule applies if you’re a Canadian person living in the US with US citizenship from pre-November 1995. US won’t collect against them on behalf of Canada, either.
@shubert
I believe the “pre 1995” exemption may be due to an Federal Court of Canada case:
– Chua vs Ministry of National Revenue [2000]
Chua sold a condo in Hawaii and moved to Canada, subsequently becoming a Canadian citizen. Capital gains were assessed by the US retroactively. Chua, now in Canada, ignored the assessment.
US asked Canada to assist in collection (under the Tax Treaty) of the capital gains assessment, because the tax debt predated Chua becoming a Canadian citizen.
The court ruled that the Charter equality rights of applicant trumped Mutual Assistance Collection of US Tax by Canadian Tax Authorities – ruled that even if this particular person was not yet Canadian citizen at time of tax debt, they deserved equal protection from the Tax Treaty.
I believe the Treaty was then changed to extend this protection retroactively to any resident of Canada before the court ruling.
NB: this was due to US source income from sale of a US-based asset as well.
This 1995 date and the associated court case and reciprocal amendment deserve a writeup with specific references. Can schubert1975 and Wondering provide citations to sources and/or live links?
@Wondering
I am looking at this Chua case right now. I believe the charter implications regarding Canadian citizens who are “US Persons” are big very big as a result of this case. Like the smoking gun we have been looking for, for months. It also is the first instance I have found of CRA attempting to collect on behalf of the US.
Link to writeup on Chua
http://books.google.com/books?id=SitYiopxW1sC&pg=PA316&lpg=PA316&dq=Chua+vs+Ministry+of+National+Revenue&source=bl&ots=osG1ltIOUu&sig=_jnBKkAaCjSXq1vhBNQ-1EYa00w&hl=en&sa=X&ei=HfuWT4GLJ5OC8AShlP2_Dg&ved=0CGMQ6AEwCQ#v=onepage&q=Chua%20vs%20Ministry%20of%20National%20Revenue&f=false
Here is a link to one of Chua’s lawyers
http://www.mackenziefujisawa.com/ourteam_christopherharvey.htm
RE: Chua
Here is link to Court Report:
http://reports.fja.gc.ca/eng/2001/2001fc27673.html
Here is link to interesting PDF/Powerpoint which cites that case as well:
“Strategies for Resolving Cross-Border Tax Controversies”
http://www.google.ca/url?sa=t&rct=j&q=chua%20vs%20ministry%20of%20national%20revenue%20&source=web&cd=3&ved=0CDAQFjAC&url=http%3A%2F%2Fwww.fasken.com%2Ffiles%2FPublication%2F71fac56a-711a-4497-98c6-369f5c04ab80%2FPresentation%2FPublicationAttachment%2F2c86f85b-fba2-4748-85ae-eabf3472a5de%2FSTRATEGIES_FOR_RESOLVING_CROSS-BORDER_TAX_CONTROVERSIES.PDF&ei=aP2WT7eJG6iD6AGAubTMDg&usg=AFQjCNH612XYt6S_Vrvj02JTKyDRC46tyw&cad=rja
Sorry, link posted previously for the PDF is s NG
Just Google:
Strategies for Resolving Cross-Border Tax Controversies fasken
and dnload the PDF
Another interesting Canadian banking law court decision which ruled :
– In a conflict between Canadian law and the law of a foreign jurisdiction where they are also present, Canadian banks must first be governed by Canadian law
– Canadian banks may not act as tax revenue collectors for a foreign state
Background – in response to US estate tax lien on TD US-based assets, the TD bank attempted to freeze and seize the Canadian account assets of an heir to that estate – but the Ontario court ruled against the bank
Van deMark vs. Toronto Dominion Bank [1989]
——————————————————————————
(quotes from the judgement)
“There is no dispute between the bank and Kenneth Van deMark and the dispute, if any, is between the bank and the Internal Revenue Service of the United States. The effect of what has occurred is that a Canadian citizen has placed assets in a branch in Canada of a Canadian chartered bank. The bank also does business in the United States and is being threatened by a United States authority.
“One must sympathize with the position of the bank but that position is the result of its election to carry on business in more than one country and that cannot influence the application of Canadian law.”
“In any event, while acceptance by the bank of a penalty imposed in the United States might seem to be a hardship, the effect of permitting the Ontario branches to defend the applicants’ claim on the basis of the bank’s liability in New York State would be to enforce indirectly a claim for taxes by a foreign state and one that has, so far as the evidence discloses, not even given rise to a New York or Federal Court judgment.”
Here is a link to the complete judgement
http://uniset.ca/other/cs6/68OR2d379.html
@ Tim
“Smoking gun” indeed…
The implications of the Van deMark vs. TD judgement could be very significant for FATCA in Canada.
@Schubert,
Is that in the Fifth Protocol? I don’t see it there….can you tell me where I might find that? Thanks.
I would like to know if it is possible to renew my American passport in Belo Horizonte????? I live in Minas Gerais. Or do I have to schedule an appointment in Rio or São Paulo?
@Fred Joy McCarroll II;
This is from the US Embassy site for Brazil:
http://brazil.usembassy.gov/addresses.html
The listing for Belo Horizonte says:
Note: This office is open for commercial services only. For visa information please contact the Applicant Service Center in Belo Horizonte. Site: http://brazil.usvisa-info.com. Phone: 55 (31) 3958-0556.
Av. Contorno 4520, 8th floor
30110-028 – Belo Horizonte, MG
Phone: 55 (31)3213-1571
Fax: 55 (31) 3213-1575
Hours: 08:00 am to 05:00 pm
E-mail: Belo.Horizonte.office.box@mail.doc.gov“
@Fred, this is posted re passports:
U.S. Citizen Services
U.S. Passport Services
http://brazil.usembassy.gov/passports.html