At an NDP event last night I met a fellow whose son has written this.
Do not take this as an endorsement as much as potentially useful info for those who wish to “not remain hidden.”
American citizens abroad have always had an obligation to file U.S. income tax returns. In recent years the IRS has stepped up enforcement of this obligation against U.S. citizens who live in Canada. For the first time, many American citizens in Canada who have little or no connection with the U.S., other than their citizenship, have become aware of their U.S. tax responsibilities. Filing dual tax returns can appear daunting, but need not be difficult. Most people’s tax situations are not complicated. But instead of completing their returns themselves, they pay financial professionals hundreds of dollars.
This book provides an alternative solution. This plain language guidebook helps American citizens in Canada complete and file their U.S. tax returns.
@Arrow
You wrote: “Clearly a Canadian lawyer called to bar in Canada and nowhere else is not bound to advise a Canadian in Canada to follow US law.” Here’s a similar candid opinion by two Canadian tax lawyers:
“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.”
That’s the final summary paragraph from legal opinion article.“US Tax Collection in Canada”, published in “Canadian Tax Highlights” Vol. 19, Number 9, Sept 2011-10-14 Canadian Tax Foundation.
The authors are: Erin L. Frew and S. Natasha of Reid Thorsteinssons LLP, Vancouver (leading tax law firm)
Article documented the difficulty of enforcing US tax claims in Canada:
– Canadian courts will not enforced US tax revenue claims in Canada
– Under the Canada-US tax treaty, Canada Revenue Agency cannot collect US taxes from Canadian citizens, unless the tax claim preceeded their date of citizenship.
Arrow,
I have yet to find a lawyer eligible to practice tax law in both countries. There is probably someone out there but I have yet to find them.
From the book description:
“As of January 1, 2013, Canadian banks are required to disclose to the IRS assets and bank accounts held by US citizens in Canada so the obligation is now more urgent than ever.”
I would say this book is pretty biased, and not factually correct as that is clearly not true.
@Tim
I know several lawyers qualified to practise in both countries. This question should be put to them.
A Canadian lawyer who does not practise before the IRS has no Circular 230 obligations. U.S. lawyers who practise before the IRS appear to be compliance specialists who owe a Circular 230 primary obligation to the IRS. It appears their obligation is to advise compliance – i.e. your obligations under the law. Your obligations under U.S. law are to file 1040s and FBARs. Your obligation is NOT to enter OVDP. Yet, many U.S. lawyers herded minnows into OVDP on the basis that this is what the IRS wanted. Go figure.
The issue is: to what extent do the Circular 230 obligations to the IRS conflict with a lawyer’s duty of care to the client.
Non U.S. lawyers do NOT have Circular 230 obligations and have clear ethical obligations to advise the client objectively.
So, here is where I think this stands:
Non U.S. lawyer = clear duty to client, but can’t tell somebody to break the law.
U.S. lawyer = clear duty to IRS and possible duty to client.
What does this mean for a person seeking legal advice? U.S. lawyer? Canadian lawyer? Dual status lawyer? You can decide this based on your circumstances. That said all U.S. lawyers will advise compliance. Non-U.S. lawyers? Depends.
The few lawyers qualified to practise in both Canada and the U.S. may have a conflict of interest. A U.S. lawyer must advise compliance. A Canadian lawyer must advise the client of his rights under the law. Would be interested to hear the perspectives of some lawyers on this question.
Perhaps a dual U.S. Canada lawyer is hopefully conflicted and can’t act for you.
This is a very important issue that has huge, life altering consequences to you – the client.
I stumbled upon this article from the Canadian Tax Foundation which confirms what Flaherty has been saying which is that Canada will not collect FBAR penalties or US taxes from Canadian citizens.
http://people.stu.ca/~hunt/ustaxinfo/ctf.pdf