This is an extremely important post because it makes clear that some “US Persons” in Canada, due to holding a green card, have an option to follow the advice of the CRA and not identify themselves as a US Person to their financial institution. This may also be possible in other countries IF a treaty has the same provisions as those discussed in this post and that tax agency has a similar position. Please do check carefully and follow through before deciding whether this can apply to you. And note, nothing in this post can be considered to be accounting or legal advice for your situation.
Without intending it, we seem to have started a new approach to the ongoing problem of having US law inflicted upon us outside the US. I consider this post connected to my recent posts which I will call the “Tax Treaty Series.” Brockers outside of Canada are encouraged to do what we do best; i.e., go and research this to see if people in your countries also have a possibility of utilyzing this information. I think it is undeniable that Brock has had perhaps the largest effect on these issues due to our beginning as a resource tool based upon research. Due to our REFUSAL to believe what we were being told without adequate proof. We have managed to make this situation/people uncomfortable and forced to see that there are other options available than those we are told/offered. No other expat organization as far as I can see, in the last four years, has contributed more. In this spirit, I want to initiate a new effort focused upon looking for “loopholes;” not loopholes in the sense that we get out of doing something. Loopholes where governments have failed to “nail” us to the US’s requirements and by which we may legally NOT follow what is presumed by such governments and the tax compliance industry. I think treaties are an area where we can do more than we have in the past. And I ask for suggestions for a new term – not “loopholes” – what shall we call these? – Patricia Moon
*****
cross-posted from citizenshipsolutions.ca
Introduction …
Circa 2014: Are Green Card Holders who r resident in Canada "US Persons" within the meaning of Canada US FATCA IGA? https://t.co/txcOlpNMfJ
— Citizenship Lawyer (@ExpatriationLaw) April 3, 2016
The above tweet references a comment that was left on Olivier Wagner’s Tax Samurai blog. Olivier is discussing an earlier post of mine called “When It Comes To FATCA, There Are Four Kinds Of Americans Abroad“.
I highly recommend his “post about my post”.
The comments discuss the question of:
Is a Green Card Holder resident in Canada a “U.S. Person”
for the purposes of FATCA?
The last comment notes that the Canada Revenue Agency is advising U.S. Green Card Holders who are resident in Canada that they should NOT identify as “U.S. Persons” under the FATCA IGA.
The exact text of the comment reads:
Green Card holders in Canada are interpreting the following statement from the Government of Canada to mean that FATCA does NOT apply to them:
http://www.cra-arc.gc.ca/tx/nnrsdnts/nhncdrprtng/ndvdls-eng.html
“I hold a U.S. green card. How does this affect my tax residency?
If you are a green card holder (that is, a lawful permanent resident of the U.S.), the U.S. considers you to be a U.S. resident.
However, if you are a resident of Canada for tax purposes and do not hold U.S. citizenship, you should not identify yourself as a U.S. person to your Canadian financial institution.”
The actual IGA is here.
http://www.fin.gc.ca/treaties-conventions/pdf/FATCA-eng.pdf
The definition section includes “U.S. residents” which presumably means tax residents (which in the case of Green Card Holders may be affected by a Treaty election).
The plain reading of the statement on the CRA site will mean that Green Card holders resident in Canada will NOT identify as being U.S. tax subjects.
Note: I tried to leave a similar comment a moment ago, but it didn’t seem to show up. This is a duplicate. Feel free to pick one comment or the other.
– See more at:
http://www.taxsamurai.com/index.php/2014/09/06/four-kinds-americans-abroad-response/#comment-7
The purpose of this post is to expand this discussion …
Let me take you through a step-by-step analysis in 9 parts.
Part 1. What does the Canada U.S. FATCA IGA actually say?
FATCA is a “hunt” for “U.S. Persons” (focusing on those born in the
U.S.) and, according to the IGA:
1 (ee) The term “U.S. Person” means
(1) A U.S. citizen or resident individual,
This subparagraph 1(ee) shall be interpreted in accordance with the U.S. Internal Revenue Code.
https://www.fin.gc.ca/treaties-conventions/pdf/FATCA-eng.pdf
Part 2. Who is a “U.S. Person” according to the Internal Revenue Code?
S. 7701(a) of the Internal Revenue Code tells us that:
(a) (30) United States person
The term “United States person” means—
(a) a citizen or resident of the United States,
(and more that are not relevant to this post)
Part 3. Is a Green Card holder considered to be a “resident” of the United States?
Well, let’s look to the Internal Revenue Code. The answer is found in S.
7701(b) of the Internal Revenue Code.
(b) Definition of resident alien and non-resident alien
(1) In general
For purposes of this title (other than subtitle B)—
(A) Resident alien
An alien individual shall be treated as a resident of the United States with respect to any calendar year if (and only if) such individual meets the requirements of clause (i), (ii), or (iii):
(i) Lawfully admitted for permanent residence
Such individual is a lawful permanent resident of the United States at any time during such calendar year.
(ii) Substantial presence test
Such individual meets the substantial presence test of paragraph (3).
First year election
Such individual makes the election provided in paragraph (4).
(B) Non-resident alien
An individual is a non-resident alien if such individual is neither a citizen of the United States nor a resident of the United States (within the meaning of subparagraph (A)).
Conclusion: Under the Internal Revenue Code, a Green Card Holder (whether living in the United States or not) is considered to be a “resident” for tax purposes.
Part 4. If a Green Card Holder is a “resident” of the U.S. under the provisions of the Internal Revenue Code, then isn’t a Green Card Holder a “U.S. Person” under the Canada U.S. FATCA IGA?
Interesting …
First, Canada has the right to interpret the IGA.
Second, Canada and the U.S. have a “Tax Treaty”. One of the purposes of the Tax Treaty is to determine “residence” if a person qualifies as a “resident” of both Canada and the U.S. for tax purposes.
Under U.S. law a Green Card holder is a “U.S. resident” for tax purposes. But, under Canadian law, a Green Card holder who is resident in Canada is also a Canadian resident for tax purposes. It’s totally unfair for a Green Card holder to be considered to be a “resident” of BOTH Canada and the United States for tax purposes, right? (Only U.S.
citizens should be subjected to this level of unfairness, see below.)
Does the Tax Treaty resolve the question of “dual residency”? The answer is YES. You will find the answer in Article IV of the Treaty, which
includes:
2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows:
(a) he shall be deemed to be a resident of the Contracting State in which he has a permanent home available to him; if he has a permanent home available to him in both States or in neither State, he shall be deemed to be a resident of the Contracting State with which his personal and economic relations are closer (centre of vital interests);
(b) if the Contracting State in which he has his centre of vital interests cannot be determined, he shall be deemed to be a resident of the Contracting State in which he has an habitual abode;
(c) if he has an habitual abode in both States or in neither State, he shall be deemed to be a resident of the Contracting State of which he is a citizen; and
(d) if he is a citizen of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.
Therefore, under the Canada U.S. Tax Treaty, a Green Card Holder who is “resident” in Canada, will be deemed to be a resident of Canada and NOT of the United States.
And this is why I believe that the Canada Revenue Agency provides the following advice to Green Card Holders who are “resident in Canada”:
I hold a U.S. green card. How does this affect my tax residency?
If you are a green card holder (that is, a lawful permanent resident of the U.S.), the U.S. considers you to be a U.S. resident.
However, if you are a resident of Canada for tax purposes and do not hold U.S. citizenship, you should not identify yourself as a U.S. person to your Canadian financial institution.
http://www.cra-arc.gc.ca/tx/nnrsdnts/nhncdrprtng/ndvdls-eng.html
(Note that in taking this position, the Government of Canada, is under the provisions of the tax treaty, “treating” Green Card Holders who are resident in Canada as residents of Canada and NOT of the United States.
Note also that those Green Card Holders are NOT required to actually elect to claim the benefits of the treaty.)
Part 5. Oh my God! If Green Card Holders resident in Canada are NOT “U.S. Persons” under the FATCA IGA, then shouldn’t this apply to U.S. citizens resident in Canada too?
Not so fast. The Canada U.S. Tax Treaty contains a provision commonly known as “the savings clause”. You will find it in Article XXIX, paragraph 2:
Miscellaneous Rules
1. The provisions of this Convention shall not restrict in any manner any exclusion, exemption, deduction, credit or other allowance now or hereafter accorded by the laws of a Contracting State in the determination of the tax imposed by that State.
2. Except as provided in paragraph 3, nothing in the Convention shall be construed as preventing a Contracting State from taxing its residents (as determined under Article IV (Residence)) and, in the case of the United States, its citizens (including a former citizen whose loss of citizenship had as one of its principal purposes the avoidance of tax, but only for a period of ten years following such loss) and companies electing to be treated as domestic corporations, as if there were no convention between the United States and Canada with respect to taxes on income and on capital.
3. The provisions of paragraph 2 shall not affect the obligations undertaken by a Contracting State:
(a) under paragraphs 3 and 4 of Article IX (Related Persons), paragraphs
6 and 7 of Article XIII (Gains), paragraphs 1, 3, 4, 5, 6(b) and 7 of Article XVIII (Pensions and Annuities), paragraph 5 of Article XXIX (Miscellaneous Rules), paragraphs 1, 5 and 6 of Article XXIX B (Taxes Imposed by Reason of Death), paragraphs 2, 3, 4 and 7 of Article XXIX B (Taxes Imposed by Reason of Death) as applied to the estates of persons other than former citizens referred to in paragraph 2 of this Article, paragraphs 3 and 5 of Article XXX (Entry into Force), and Articles XIX (Government Service), XXI (Exempt Organizations), XXIV (Elimination of Double Taxation), XXV (Non-Discrimination) and XXVI (Mutual Agreement Procedure);(b) under Article XX (Students), toward individuals who are neither citizens of, nor have immigrant status in, that State.
Just see the part that I bolded in paragraph 2. This is how the “savings clause” works. Because of the “Savings Clause” you do NOT get the benefits of the Tax Treaty if you are a U.S. citizen!
An injection of commentary: The ONLY people (if they are worth calling people) who should be justly considered to be tax residents of BOTH Canada and the United States for tax purposes are U.S. citizens. Clearly they should be punished for having been “Born in the USA” and having left the USA, right? (If you don’t note the sarcasm, this sentence is to emphasize the sarcasm!).
Understand that the Canada U.S. Tax Treaty does NOT prevent double taxation on U.S. citizens resident in Canada. The “savings clause”
GUARANTEES double taxation of U.S. citizens resident in Canada. Any relief from double taxation comes NOT from the Treaty but from the Internal Revenue Code under the “Foreign Tax Credit” rules or under the “Foreign Earned Income Exclusion”!Yet people have been conned into believing that the Treaty is to prevent double taxation on U.S citizens. Go figure!
Part 6. Wow! the treaty “tie breaker” rules are an amazing opportunity? But, what if I am a Green Card Holder in a country that (1) has a FATCA IGA with the USA but that (2) does NOT have a “tax treaty”
with the USA?
Interesting question.
First, the U.S. Treasury makes it clear that a country can have a FATCA IGA without having a Tax Treaty.
Foreign Account Tax Compliance Act (FATCA) https://t.co/imCNQzMwDM – list of countries with #FATCA treaties (or whatever they are)
— Citizenship Lawyer (@ExpatriationLaw) April 3, 2016
Second, a list of countries that the U.S. has a tax treaty with does NOT include all the countries in the world.
Does your country have a tax treaty with the USA? It'ts time to check! Here is the list of U.S. Tax Treaties : https://t.co/XJg8xegPsT
— Citizenship Lawyer (@ExpatriationLaw) April 3, 2016
Who could have known? The Bahamas (which by the way is a great place to combine a vacation with a renunciation of U.S. citizenship) has a FATCA IGA but no tax treaty.
The relevant provision of the U.S. Bahamas IGA include:
1(aa) The term “U.S. Person” means a U.S. citizen or resident individual, a partnership or corporation organized in the United States or under the laws of the United States or any State thereof, a trust if (i) a court within the United States would have authority under applicable law to render orders or judgments concerning substantially all issues regarding administration of the trust, and (ii) one or more U.S. persons have the authority to control all substantial decisions of the trust, or an estate of a decedent that is a citizen or resident of the United States. This subparagraph 1( aa) shall be interpreted in accordance with the U.S. Internal Revenue Code.
Looks like the Green Card Holder in the Bahamas is “SOL” a “U.S Person” under the U.S. Bahamas FATCA IGA.
In the same way that the U.S law treats U.S. citizens abroad differently depending on their country of residence, FATCA treats Green Card Holders abroad differently depending on their country of residence.
#YouCantMakeThisUp
Part 7. Back to Green Card Holders in Canada and the Canada U.S.
Tax Treaty
As always, there is “Good News” and “Bad News”.
First, the “Good News”.
You are being advised (with justification) that you are NOT a “U.S.
Person” for the purposes of FATCA reporting. In other words, if your bank asks you the question:
“Are you a “U.S. Person”, the Canada Revenue Agency is advising you to answer in the negative.
Second, the “Bad News”
As a Green Card Holder you are considered to be a “U.S Person” under the Internal Revenue Code. In “people talk” this means that you must file U.S. tax returns. The only question is whether you file as a “U.S.
resident – 1040” or if you take advantage of the provisions of the Tax Treaty by treating yourself as a “non-resident” of the U.S. and file as a “non-resident alien” – 1040-NR. This may involve making a formal election under the Tax Treaty to deem yourself to be a non-resident of the U.S. for tax purposes. You should get professional advice before filing as a “non-resident of the United States”. I repeat that you should get professional advice before taking advantage of the tax treaty and filing as a “non-resident” alien!
Why? Because …
1. If you file your U.S. tax return as a “non-resident” you may jeopardize your status as a lawful permanent resident of the United States (you might lose your Green Card); and
2. You may (according to the provision of S. 7701(b)(6) of the Internal Revenue Code have “expatriated yourself” and (are you ready for this?) be subject to the Exit Tax Provisions of the Internal Revenue Code.
So, PLEASE be careful …!
As per S. 7701(b)(6) of the Internal Revenue Code, ALL Green Card Holders are considered to be U.S. taxpayers. This harsh reality has been recently confirmed in the case of Topsnik. I will save you the trouble. Here is the
case:
Part 8. The “Oh My God” moment for Green Card Holders – How to cease being as U.S. tax subject …
I will discuss “Green Card Expatriation” (how to get rid of the Green Card SAFELY and possible tax consequences for so doing) in a future post. This future post will include the question of which Green Card Holders are subject to the S. 877A Exit Tax (a frightening prospect).
Doesn’t this situation apply to ‘foreign born’ US citizens as well? After all what isn’t a US Passport really just a glorified Green Card?
Yes I know the procedure is different to ‘dump’ the Green Card without the $2350 fee involved along with the long winded US Embassy song and dance.
However from an FFI’s point of view there challenges of identifying a ‘US person’ are the same – at least today.
I really appreciate John addressing this aspect (kryptonite cards) of the whole sordid issue in such detail. Many thanks! Since my I-407 application with long expired GC attached was ignored, shredded, black holed (who knows?) I still feel I’m in a forever limbo situation … but at least I’ve known ever since I spied the CRA FATCA Q&A in 2014 how I would deal with the bank. However, the IRS has got my number (SS#, stupidly gave them my SI# too) so that’s the direction the danger has always been the greatest for me. It’s like I took a tangled knot and in an attempt to loosen and untangle it, I pulled the darn thing tighter instead. I look forward to John’s next article about the proper disposal of a GC, even though my attempt failed.
Lots of info to digest. If you are a green card holder probably best to keep it to yourself.
@ Patricia Moon
You doubled up on a part of your introduction. You might want to delete the redundancy.
Tricia,
The savings clause in the 1982 US/Australia treaty reads as follows:
(In the 2001 protocol, this was amended to include former long-term residents who had given up that status to avoid tax.)
So, are green card holders considered “individuals electing under … domestic law to be taxed as residents”? If that is the case, then they can be claimed as residents by both countries as the tie-breaking rules don’t apply. Or, are they just “residents” who can fall back on Article 4 and be taxed as residents in only one of the two countries? Does the act of applying for a green card constitute an election to be taxed as a resident? Or, does the election have to be a specific election under the Internal Revenue Code?
Would that be. “Gordian Knot” EmBee, which he IGA is inefficient at cutting?
@EmBee
Thanks. I was in edit to correct spelling errors and when I noticed the duplication I thought I had checked and made sure I hadn’t updated. Not concentrating! Talking on the phone and watching the Blue Jays. My bad.
@Patricia Moon
Can you clarify which group of people you are referring to here–because there are two different groups in very different situations?
A green card can only be maintained for a short period of time while living outside the USA because the whole premise of a green card is that one is a permanent legal of the USA. Lose that residency and you lose the green card.
So are we talking here about people who have only lived outside the USA briefly (usually no more than 1-2 years) and intend to return to the USA with their green cards within that 1-2 year period?
Or are we talking here about people who left the USA long ago and have no intention to return? Such a person no longer has a valid green card–however it is a good idea to file Form I-407 to document your intention never to return to the USA in order to close off one’s tax status.
Green cards currently expire after 10 years. Are we talking here about an expired green card? Or are we talking about one that was issued in the last 10 years but that the holder has no intention to renew? Or are we talking about an old (pre-1989) green card that has no expiration date (but would still be voided by the person moving outside the USA)?
It would be good to clarify the exact scenario you have in mind here. Unlike expat US citizenship, green cards don’t stay active for an indefinite period if you leave the USA.
The CRA advice seems strangely ambiguous.
What the FIs are supposed to find out, under the Model 1 IGA, is whether the holder of a potentially “reportable” account is a US citizen and/or tax-resident in the US. Telling them not to identify themselves to the FI as a “US Person” just seems to confuse the issue since no one including the IRS seems to be at all sure what the term “US Person” actually means.
@Everyone
Please note this is NOT my post. I am reposting from citizenship solutions.
I simply am not familiar enough with these rules to offer any real answers……….
‘It’s totally unfair for a Green Card holder to be considered to be a “resident” of BOTH Canada and the United States for tax purposes, right? (Only U.S.
citizens should be subjected to this level of unfairness, see below.)’
I don’t think that’s true. I’ve read that the Supreme Court of Canada ruled that a person might have multiple residences.
Also, in 1993 when a US consul proved in writing that it’s illegal for the US to issue a tourist visa to my wife but I could sponsor her for a green card, and when a Canadian consul said the law doesn’t dictate an answer but he promised my wife would never get a tourist visa but I could sponsor her to immigrate, I started to figure out how we could deal with it. My wife didn’t intend to immigrate to either place, but since laws require it, I figured out that I should sponsor her for both places and she has to move back and forth about every three months. We didn’t do it, but it sure looks possible.
If we had proceeded as required, she would have fallen through (a), (b), and (c), and ended up here: “(d) if he is a citizen of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.”
Well, let’s forget about that for the moment and let’s proceed.
‘An injection of commentary: The ONLY people (if they are worth calling people) who should be justly considered to be tax residents of BOTH Canada and the United States for tax purposes are U.S. citizens. Clearly they should be punished for having been “Born in the USA” and having left the USA, right? (If you don’t note the sarcasm, this sentence is to emphasize the sarcasm!).’
That isn’t sarcastic enough. Remember that people also deserve to be punished for inheriting the STD from their parent, even if they were born in Canada (or other country) and never set foot in the US and ever invest in the US. (In fact, they might even be in a country which has come under US sanctions so the US doesn’t even allow the person to buy US dollars to pay US tax.)
@Dash,
Please remember this is not my post.
I am not at all sure I can answer your question completely. Maybe we can work through it to get to an answer.The only reason I am willing to give it a try is because I have studied Canadian taxation. As far as the Treaty goes, the only section I have really started to understand/work with is the Article dealing with exchange of information.
This post is about the possibility of whether greencard holders (presumably living outside the US and who are tax residents of another country) are US Persons or not for FATCA purposes. The only way I would know how to approach this would be to begin with the normal taxation rules of Canada. And then, wherever one pays tax will have a bearing on whether or not there is a reason for accounts to be reported for FATCA.
From your description, my perception is there are two scenarios-those who want to return to the US and those who do not. From the Canadian point of view, it does not matter whether the greencard is valid, expired or cancelled as long as the person satisfies the conditions to be a Canadian taxpayer. The ones who do not want to return would likely make use of this option.
The ones who want to return should file as US residents so as not to jeopardize their ability to return.
Now, we all know the US thinks anyone with any sort of greencard is liable to US tax on their worldwide income. Only those who have cancelled by filing an I-407 are exempt in the eyes of the US. However, the rest of the world views taxation solely from the factual aspect of residency. One is not at all free to live in another country and claim no tax is due because the US considers one a tax resident citizen.
As John Richardson demonstrated above, there is an agreement between Canada and the US as to how to deal with such situations.
One reason this is confusing is that there are two aspects to an expired greencard. One, the right to US residency is lost. Two, losing the right to residency is not the same as losing the greencard due to filing of I-407.
The only other concern I could imagine is the savings clause. LPRs are mentioned in the savings clause. The savings clause in the US-Canada Treaty is reflective of the expatriation laws. However, if no I-407 has been filed, I don’t see how one could say the an LPR has lost status.
The savings clause of the US-Canada tax treaty says this:
@Karen
Here’s a try at an answer. I cannot know from any standpoint other than Canada; am simply not familiar with Australian tax law.
I don’t see your savings clause as different that ours and please see my thinking on that in response to Dash.
This makes sense and I think is an exact reflection of what John is saying.
I don’t understand. One applies the tiebreaker rules to dual residents.A dual resident may or may not be a dual citizen. The final rule is citizenship. A greencard holder is not a citizen.
I presume one has to apply for a greencard outside of the US? Or can one have some kind of visa until such time one is eligible for a greencard? I have never emigrated to the United States LOL!
Certainly applying for a greencard has no effect on one’s residence status in a non-US country I would think. Is your question where to file the election? I will have to read up. But my guess is, if you are required to pay tax to a country you reside in you have to file there. The act is an “election.” The IRS cannot have any role in that.
@iota
I don’t think CRA’s explanation is vague at all. Do you not think Canada has a right to tax its residents and rely upon the terms of the Treaty?
“Or can one have some kind of visa until such time one is eligible for a greencard?”
A fiance[e] visa requires conversion to green card while in the US, and some kind of employment visa (I think H-1B) allows optional conversion to green card while in the US.
@Patricia Moon
Thank you for that message. I’d forgotten this was originally posted elsewhere. I’ve replied at the original site (citizenshipsolutions.ca) and my comment is awaiting moderation.
In general I think we are talking mostly here about people who–both in their own eyes and that of the DHS–have given up their green cards but who–in the eyes of the IRS–are still tax residents. Sometimes the left hand of the US government doesn’t know what the right hand is doing and that is important to make clear.
@Patricia Moon – sorry, I should have made it clear that I was referring to the advice to Green Card holders not to identify themselves to the FI as “US Persons”. Because the term “US Person” is ill-defined. If the CRA advised a Green Card holder not to identify themselves as US tax-resident, that would be clearer.
@Karen
AFAIK the act of applying for a green card–from inside or outside the US–doesn’t change tax status. However once you spend a single day in the US as an actual green card holder (not just an applicant) the green card tax status kicks in–and you need to be very careful to give it up via the I-407 if you want to get out from under the IRS.
@ Norman Diamond
That seems right. The fiancé(e) visa is obtained while the future victim is outside the USA but once (s)he is inside the USA and married and has satisfied the immigration officer that (s)he is indeed in an honest marriage, then the greencard is issued. Or such was the case in the early 80s at least.
The D.C. Pukes will find any excuse they can to declare anyone a U.S. Person for tax purposes. They would sell dead bodies to make dog food if they could get away with it. Republicans said they’d stop the nonsense Obama started if we would only elect them into a majority. We did , they didn’t, now the whole country is mad as hell at every politician and they simply don’t or won’t get it. They are blaming Trump for the anger. He simply tapped into it and will ride it all the way to the White House. Both Democrats and Republicans will get their financial play houses torn down and it won’t be so lucrative to extort campaign contributions from those they accept money to change the Marxist Income tax law to favor their contributors and screw us meaning THE USA.
@ Dash1729
Yes, be oh so careful to give up that greencard by an I-407, EXCEPT the greencard does not come with disposal instructions (or didn’t used to anyway) and prior to the internet I would wager a guess that very few greencard holders returning to their homeland with the intent to stay there permanently would know about the existence of a disposal procedure requiring a special application form.
Tricia,
I have never applied for a green card in the US either, so I don’t know exactly what the rules are.
My point was that, the way the Australian savings clause is constructed there is a difference between just being a US resident for US tax purposes and “electing to be treated as a resident” for US tax purposes. If applying for and retaining a green card is seen as electing to be treated as a US tax resident, then green card holders would be treated just as unfairly as citizens. OTOH, if maintaining a green card is seen as solely an immigration issue, then green card holders are not specifically electing their US resident tax status and can use the treaty’s tie-breaking rules to determine a single country to file tax in as a resident.
@EmBee
In the pre-Internet era it was the duty of cross border tax professionals to inform their clients about such responsibilities. Whether the tax professionals themselves knew about the I-407 in that era, I do not know. Certainly individual former US taxpayers should not be held accountable if their supposedly competent advisors didn’t properly advise them.
@Dash
If that is true about not being advised properly, then none of us should be held accountable either, eh?
My guess is that they probably didn’t know. Most didn’t know about FBAR either.
@ Dash1729
We didn’t know there was such a thing as a “cross-border tax professional” until 2012. The only tax preparers we knew about were the H&R Block and we never used them. DIY seemed to work for us — never a rejected tax filing — but obviously our ignorance did not, in the end, create bliss.