Some constituents have expressed concern regarding the U.S. Internal Revenue Service’s Offshore Voluntary Disclosure Initiative. This is exclusively a U.S. program, with the federal Canadian Government playing no part in its creation or execution.
I appreciate that many individuals are frustrated to learn that they can face penalties for previously undisclosed foreign accounts and assets. The U.S. government requires its citizens, even those living abroad, to file income tax returns and associated tax forms – even if those U.S. citizens do not have to pay any U.S. income tax because they already pay Canadian income tax, and even if they have dual citizenship with Canada. This requirement has been in place since 1913.
It is unfortunate that the U.S. maintains this requirement as most other industrialized nations have moved away from this specific measure. However, it is entirely within the purview of the U.S. government to impose such a requirement.
While it is within the U.S. government’s authority to do this, it is not good policy in my view. That is why I have directly raised the concerns of many constituents of Edmonton-Leduc like you regarding the Offshore Voluntary Disclosure Initiative with the Honourable Jim Flaherty, Minister of Finance.
Minister Flaherty has been in constant contact with his U.S. counterparts, pressuring them to understand fully their actions against Canadian residents. Below is a letter from Minister Flaherty submitted to several American papers expressing concerns on FATCA/FBAR.