Tim reports that yesterday’s budget document prepares Canadians for the implementation of the international Common Reporting Standard (CRS) in 2017. Note the section in bold. It’s too bad adopting the CRS doesn’t cancel the FATCA IGA! As it stands, the CRS is “common” to everybody except Americans! …. another case of discrimination against us adopted by the Canadian government. Thank you, Tim, for alerting us to this.
“Under the new standard, foreign tax authorities will provide information to the Canada Revenue Agency relating to financial accounts in their jurisdictions held by Canadian residents. The Canada Revenue Agency will, on a reciprocal basis, provide corresponding information to the foreign tax authorities on accounts in Canada held by residents of their jurisdictions. In order for the Canada Revenue Agency to obtain the information to be exchanged, the common reporting standard will require financial institutions in Canada to implement due diligence procedures to identify accounts held by non-residents and report certain information relating to these accounts to the Agency. It will not require reporting on accounts held by residents of Canada with foreign citizenship. The standard includes important safeguards to protect taxpayer confidentiality and ensure that the exchanged information is used only by tax authorities and only for tax purposes.
“Canada proposes to implement the common reporting standard starting on July 1, 2017, allowing a first exchange of information in 2018. As of the implementation date, financial institutions will be expected to have procedures in place to identify accounts held by residents of any country other than Canada and to report the required information to the Canada Revenue Agency. As the Canada Revenue Agency formalizes exchange arrangements with other jurisdictions, having been satisfied that each jurisdiction has appropriate capacity and safeguards in place, the information will begin to be exchanged on a reciprocal, bilateral basis. Draft legislative proposals will be released for comments in the coming months.”
@phil I am curious what people think.
do you ever really have to travel back to the states?
if the answer is no I would change to a local client based institution, quit doing American taxes and get on with your life. if you were to get a brown envelope from the IRS I would file it in the circular basket and wait for the next one and then the next one. they are not going to come after you…a Canadian citizen residing in Canada. for me……I have forgotten that America exists…..I am never going to be crossing that border again and am going to let uncle sam come find me. I like others here have “self relinquished” and are forgoing the formal process all together
if you have to cross into America I will let others answer their thought on what you should do.
Phil. My thoughts.
Re: “Do they have some software that lets them know if people randomly stop filing? Will it trigger an audit or something?”
They might, and it might, but you live in Canada. IMO, you can rip up any mail they send you. As long as your FFI does not know your status, I think you can safely tell USA to F-off and stop filing.
Re: “Another question I have, if an American in Canada were to get audited, what info could the IRS get of that person? Would it just be what the person gives them voluntarily or would the CRA hand over all of our info? ”
I suspect that the only info they get is the info you give. But just to be on the paranoid side, does the IRS know your Canadian SIN? If not, they have nothing to connect you with at CRA.
Re: “I honestly don’t, but if someone had an account that they have never reported, lets say at a non FATCA reporting credit union like Van City, could the IRS ever discover that during an audit or any other method? ”
No way, unless Van City knew you were a US person and reported you as per FATCA.
Seriously Phil, I think you are way over stressing your personal risk and this is coming from a high-stress person. Having said that, if it puts your mind at ease, spend the 3K and renounce.
Mettleman,
Phil should be fine travelling to USA on his Canadian passport. Lots of people have the same names – no biggie.
@ Phil,
Re:
CRA will not provide assistance to IRS if the person was a Canadian citizen at the time the tax debt arose. Canada-US Tax Treaty:
@phil
the IRS in Canada is like the monty python skit “stop or I shall say stop again”
in that reply to this brown envelope or we will send you another brown envelope
you are over thinking your problem
Phil,
Listen to Pacifica and Mettleman (and me)… you really are a FREE man. Just don’t tell anyone.
Disclaimer: nothing is 100%. Pay 3K and get a CLN if it makes you sleep better at night!
phil…..take the $3k donate some of it to the legal challenge and take some go away for a couple of days where there is no cell phones or internet, relax and forget all this BS. come home and start a new worry free life….:)
or spend the $3k, let the American know who and where you are and even with said CLN in hand worry about being somehow (remember this is America we are talking about) being reinstated as an amercian citizen for tax reasons……
Jeeeze, Mettleman, I never thought of THAT scenario!
Yeah! Phil. Don’t do the CLN thing – it just puts you on their radar!
This is why this blog is so amazing…. I thought I had it all figured out until Mettleman spoke out.
I love you guys!
Re:
Note, though, he commented he is up to date filing with IRS. So he’s not completely off the radar now.
Pacifca. Yes. True. For some reason, I see renouncing as a ‘pay attention to me’ sign though.
how many homelanders each year just stop filing taxes? how many of them do the IRS track down?
if Phil were to just stop filing taxes what really are the chances besides slim to none that the IRS is really going to track him down in canada and were that actually to happen besides the IRS saying “file or we will say file again” what is really going to happen?
phil….support the law suit, travel on your canadian passport and get on with your life
@ Dreamer and Mettleman,
Yes, I agree with you that he’s at low risk from IRS, for several reasons as we three have pointed out in comments above, regardless of what actions he takes or doesn’t take.
But I do feel he is on the radar (as opposed to, say, a Canadian-born person who is not in an IRS or DoS database). So, I don’t see that going for a CLN would put him on the radar because he’s already on it and therefore were it me, that would not be a big factor in my deciding what I would chose to do or not do.
How did this thread get so badly off course? Sort of like the Costa Concordia.
I think at the present time the IRS cannot determine whether the reason someone has stopped filing is that he or she has simply died.
@Phil. I self-relinquished a few years ago and quit filing. I travel regularly to the US on my Canadian passport with no problems. I never heard from the IRS when I was filing and I haven’t heard from them since I quit filing. In the unlikely event they ever do send me something I plan to mark it “Address unknown, return to sender” and drop it into the nearest Canada Post box. (Or maybe just a simple: “No longer on this planet, died in 20xx”.)
@Mettleman. Shhh! Don’t give ’em any ideas. “Reinstated as a US person for tax purposes” sounds so IRS-like that they might just take it and run with it. I suspect that what they are really trying to figure out is a way to designate everyone on the planet as a US taxable person.
@Duke. Don’t most threads go way off course and eventually wind up on the rocks?
@Mettleman, “the IRS in Canada is like the monty python skit “stop or I shall say stop again” ”
Bravo, bravo…..you had me rolling on the floor with that but you know what, you are right…..
@Mettleman, “how many homelanders each year just stop filing taxes?”
In the homeland you have thousands maybe millions who go above and then fall bellow the filing threshold to even file a tax form. Many moons ago when I lived in that place far far away, there were years when I was not required to file and I did not file even though others said I should file regardless because……..
@Maz57, ” I self-relinquished a few years ago”
There are going to be newbies at Brock who will get confused so some splaining is needed……
There are self documented relinquishers sometimes called Undocumented Emmigrants who performed a relinquishing act with the intent of ditching USC and decided they did not need nor want a CLN. I have documentation directed to me from the USG that I relinquished, was no longer a USC but do not have a CLN. At the time I figured that was nice to have as it may be needed someday and did not quite know about CLNs other than that was what you got if you renounced but I was not a renouncer.
I think by self relinquisher you are referring to those that believe an individual who has another nationality has the inherent right to toss away a nationality that is not needed or wanted in favor of their other nationality.
@Mettleman, “being reinstated as an amercian citizen ”
I firmly believe that at some point in the future this sad era will make it to the US Supreme Court and American Citizenship WILL be reinstated to everyone that received a FATCA Era CLN. The Court IMO will view all renouncing/relinquishing to have been made under duress and thereby be invalid. They will view this reinstatement as a great and joyful gesture of restoring a most precious gift.
@Pacifica, yep he is on the radar already……..if he has the money to buy a CLN he probably should……if not slowly fade away…..
George, you wrote:
” I firmly believe that at some point in the future this sad era will make it to the US Supreme Court and American Citizenship WILL be reinstated to everyone that received a FATCA Era CLN. The Court IMO will view all renouncing/relinquishing to have been made under duress and thereby be invalid. They will view this reinstatement as a great and joyful gesture of restoring a most precious gift.”
Fortunately, we will all be dead by then.
Note that “accidental” US citizens could theoretically owe exit tax if somehow the US later discovers the individual has a claim to Us citizenship that the individual wishes to renounce. Renunciation is “free” if the individual if between the ages of 18 and 18.5 or if the individual is leaving the US to “return” to the country of their birth. Renunciation is also “free” if the individual’s net worth is under US $ 2 million at time of renunciation. See the trap here? Individual does not renounce at age 18 because not enough net worth and unaware of citizenship or exit tax. Years later individual founds a company and becomes wealthy, having never set foot within the US. Now US uses Internet to determine that wealthy individual was entitled to US citizenship at birth and never renounced. US proceeds to claim back income taxes and exit tax if individual wishes to get off the merry go round. Possible to escape this result if individual resided in treaty jurisdiction before they became wealthy. Good reason to remain in Canada!
Richard, welcome.
I don’t follow a lot of your comment, especially anything regarding the term *free*.