[Many readers living outside the U.S. who are not IRS compliant, have sought advice from tax attorneys on whether they should or should not enter into a lifetime of IRS compliance, and what would be the “cost”. Maybe your tax attorney living in Canada etc. is also an Enrolled Agent of the U.S. IRS, possibly affecting the nature of the interaction between attorney and you the client. What were the options suggested and especially disclosures made to you by your attorney? Attorneys must adhere to the professional and ethical standards of their law societies. See discussion below:]
In a recent post I mentioned the situation of a “Caroline” who seeks advice from a Canadian tax attorney (let’s say in B.C.) regarding a question of (IRS) tax compliance with a country foreign to Canada.
How should the Canadian tax attorney advise this frightened Canadian citizen– specifically, regarding the disclosure of relevant options she (or any Canadian) should consider before entering, or not entering, into tax compliance with United States Internal Revenue Service?
What information should (must) the attorney disclose to the Canadian to comply with professional standards and ethical obligations of an attorney?
USCitizenAbroad suggests that the Canadian tax attorney needs to disclose two relevant facts:
“It seems to me that the first thing that a Canadian lawyer (I note that the rules of B.C. Professional Conduct are included in this post) might be to say:
1. You are living in Canada. There is NO Canadian law (no matter who you are) that requires you to comply with U.S. tax laws. Canada may [find] it amusing. But Canadian law does not require compliance.
2. The Canada U.S. Tax Treaty means that Canada will not assist the IRS in collection on Canadian citizens”
In other words, must the Canadian tax attorney say something like this to Caroline in order to comply with professional and ethical codes of conduct?:
“Caroline, you have come to me for advice on whether you, a Canadian resident for 50 years, and a Canadian citizen, should enter into a lifetime of compliance with the IRS. Well, I’m going to talk to you about the US laws that I think are relevant, but I also need to disclose to you, because I must alert you to all the relevant facts, that there is no law in Canada requiring you to be compliant with the U.S. IRS, and at present Canada will not assist the IRS in tax collection for Canadian citizens. By the way, even though I am a tax attorney in Canada, I must also disclose to you that I am an enrolled agent of, and have obligations to, the IRS — and this represents a conflict of interest that you need to know…”
By not making this disclosure, are these Canadian tax attorneys in violation of their law society’s (the governing body) Professional Code of Conduct? For example. the British Columbia Professional Code seems to be pretty clear on disclosure of facts and options:
“A [Canadian] lawyer should obtain sufficient knowledge of the relevant facts and give adequate consideration to the applicable law [This must include Canadian law — correct?] before advising a client, and give an open and undisguised opinion of the merits and probable results of the client’s cause…”
Similarly, the Rules of Professional Conduct of the Law Society of Upper Canada say:
“The lawyer’s duty to the client who seeks legal advice is to give the client a competent opinion based on a sufficient knowledge of the relevant facts, an adequate consideration of the applicable [including Canadian] law, and the lawyer’s own experience and expertise. The advice must be open and undisguised and must clearly disclose what the lawyer honestly thinks about the merits and probable results.”
It would also seem that any Canadian tax attorney who is an “enrolled agent” with the IRS must disclose that significant conflict of interest (additional loyalty) to the client. Yes? See:
“A lawyer should disclose to the client all the circumstances of the lawyer’s relations to the parties and interest in or connection with the controversy, if any, that might influence whether the client selects or continues to retain the lawyer. A lawyer must not act where there is a conflict of interests between the lawyer and a client or between clients.”
Do these issues of “reasonable disclosure” need to be brought up with the law societies? Could someone from one of the Canadian provincial law societies please respond and address these questions?
More on interacting with a Canadian tax attorney who is an IRS-approved “enrolled agent”:
According to Circular 230, this Canadian tax attorney who is an enrolled agent of the IRS appears to be obligated by IRS to inform an IRS non-compliant client of the consequences of IRS non-compliance, but there seems to be no obligation to generally represent the total interests of the Canadian client (i.e. what a good (e.g., family) attorney is supposed to provide even if this involves disclosure of an option of non-compliance to a foreign state):
“§ 10.21 Knowledge of client’s omission. A practitioner who, having been retained by a client with respect to a matter administered by the Internal Revenue Service, knows that the client has not complied with the revenue laws of the United States or has made an error in or omission from any return, document, affidavit, or other paper which the client submitted or executed under the revenue laws of the United States, must advise the client promptly of the fact of such noncompliance, error, or omission. The practitioner must advise the client of the consequences as provided under the Code and regulations of such noncompliance, error, or omission.”
There is in Circular 230 a section on conflict of interests, but there is no mention of a conflict of interest that will occur because of competing loyalties (U.S. IRS vs. a sovereign Canada):
“§ 10.29 Conflicting interests. (a) Except as provided by paragraph (b) of this section, a practitioner shall not represent a client before the Internal Revenue Service if the representation involves a conflict of interest…”
So, do Canadian (etc.) Tax Attorneys advising Canadian Clients on United States IRS compliance typically comply with the “Professional Code of Conduct” of their law societies? What is your experience?
I am posting this comment on behalf of David Lesperance who has not been able to for some time:
I presume the Canadian government would honor XXVIA for permanent residents of Canada who are not Canadian citizens.
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 either to a taxable period in which the taxpayer was a citizen of the requested state or………….
The full text of the treaty provision is here:
Focusing on S. 8 which reads in relevant part:
So, Canada will not assist the United States in collecting U.S. taxes which related to a period in which the person was a Canadian citizen.
In other words, as a general principle it appears that this is:
– an abrogation of the “Revenue Rule” in general;
– with an exception (to the general abrogation) for Canadian citizens.
All of which means that the Minister of Revenue would not assist by using the provision of Article XXVI of the Treaty in the case of Canadian citizens.
Note that this provision of the Treaty would bind ONLY the Minister of National Revenue.
My understanding is (a) that Canada Revenue will not collect tax on behalf of other countries where that tax indebtedness came about while an individual was also a citizen of Canada (basically what was already noted) and, very importantly, (b) that Canada Revenue will also not help collect penalties against said citizen either.
CROSS-POSTED FROM MAPLE SANDBOX
(with a bit of editing to a Q & A format)
If you are a Canadian citizen considering engaging ANY cross-border lawyer or accountant, ask these questions at the initial conversation (the answers are based on published legal opinions and advice from various legal professionals myself and others received) :
QUESTION: If I do not choose to comply with US extra-jurisdictional tax claims, what is the specific mechanism by which they will collect a tax claim from me using Canadian courts and laws? Can the US or any other foreign state garnishee my Canadian wages? Can they seize my Canadian bank accounts?
ANSWER: There is no mechanism by which the IRS can collect tax claims in Canadian courts, The US cannot garnishee your Canadian income. The US cannot seize funds in your Canadian bank account. Only CRA can collect taxes in Canada. (widely reported and also the subject of a specific tax article by Canadian tax experts).
QUESTION: I understand that under the Canada–US Tax Treaty, Canada will not assist in collecting US taxes from any Canadian citizen, unless the tax claim proceeded their becoming a Canadian. How does this protection apply to my situation? Am I protected by this Treaty?
ANSWER: If you are a Canadian citizen, CRA will not assist in collecting U.S. taxes–even if you are also an American citizen. (Widely reported and confirmed by Canadian Finance Ministry)
QUESTION: Do you know of any specific case where a Canadian court enforced a US personal tax claim or penalty against a Canadian citizen in Canada? When, where and who?
ANSWER: There is no known case of a Canadian court enforcing a U.S. tax or penalty against a Canadian citizen. (Does any reader know of one?)
QUESTION: Do you know of any specific case where a Canadian citizen was detained at the US border because they had not filed US tax forms? When, where and who?
ANSWER: There are no reports of Canadian citizens being detained at the U.S. border because they had not filed U.S. tax forms. (Does any reader know of any?)
QUESTION: Are you prevented by any US law, professional certification, official registration or similar covenant with any US government agency from giving me full and frank advice?
ANSWER: Full and frank advice is greatly lacking from those in the cross-border compliance industry who are trying to suck Canadians in.
Is there any known case of the IRS trying to collect direct from a Canadian citizen, in Canada? (i.e., not through withholding on US-source payments). Do they audit Canadian citizens, or write letters demanding payment of such-and-such a sum?
I’m wondering if they would avoid doing these things, given the treaty clause.
@Iota Do they audit Canadian citizens, or write letters demanding payment of such-and-such a sum?
I’m wondering if they would avoid doing these things, given the treaty clause.
Canadian citizens who are deemed to be US tax persons and who file US taxes can be audited by the IRS as any Homelander can be for the usual reasons. There is nothing to prevent the IRS with providing the Canadian citizen a demand letter for outstanding amounts owed. It makes for nicely shredded paper for hamsters or in totality to line a bird cage. Would the IRS do this knowing they have no effective way of collecting said amounts? Perhaps, if they expected people to be fearful and compliant if the amount remains unpaid. Or perhaps the IRS wouldn’t be bothered for the same reason that they are aware that collection proceedings can’t be instigated if subject to section 8. A demand letter would not surprise me if for no other reason that these are often computer generated pro forma.
Once again I will remind you there are no lawyers in Canada called to the bar of any province called attorneys. We are lawyers, colloquially but properly and formally referred to as barristers and solicitors ( other than Quebec).
In any province, if a client has a complaint about a lawyer she has retained, she has the option of filing a complaint with the provincial law society which has jurisdiction over that lawyer. This of course would include a client who believes and can demonstrate the lawyer was acting while having a conflict of interest in her matter.
“The US cannot seize funds in your Canadian bank account.”
The US can if the Canadian bank cooperates with the US.
Does Canada have a law prohibiting Canadian banks from cooperating with the US? Does an ordinary person have a snowball’s chance in hell of getting such a law upheld in court?
“Only CRA can collect taxes in Canada.”
When TD Waterhouse in Canada deducted 10% Canadian withholding (because I live in Japan) plus 30% US withholding (because I had US citizenship at the time), from 100% Canadian sourced interest income in my account in Canada, did CRA[*] collect the whole 40%?
Was the 30% portion embezzled by a CRA[*] employee instead of IRS employee Monica Hernandez?
[* I think CRA was CCRA at the time. Does that make a difference?]
“The US cannot garnishee your Canadian income.”
Though TD Waterhouse preferred to close my account rather than answer my questions, the IRS did answer my questions in those days. The IRS asserted that if my employer had an affiliated company in the US then my employer would have to deduct 30% withholding from my salary.
“Is there any known case of the IRS trying to collect direct from a Canadian citizen, in Canada? (i.e., not through withholding on US-source payments). Do they audit Canadian citizens, or write letters demanding payment of such-and-such a sum?”
They try to collect direct from a Canadian citizen in Japan (i.e., not through withholding on US-source payments). They try to collect direct from a citizen of a different country in Japan, who never had any US citizenship or residence or income or employment business operations (i.e., not through withholding on US-source payments).
They should have audited a Canadian citizen in Japan but they refused to do so because an audit might blow the cover of their embezzlers’ ring leader who hasn’t been caught yet.
They do write letters demanding payment of such-and-such a sum, even when the sum is less than the amounts of overpayments which they still refuse to refund. They do ignore our responses to their letters. They do refuse to provide hearings and due process.
“Would the IRS do this knowing they have no effective way of collecting said amounts?”
Yes they do.
@Canadian Ginny – thanks. Good point about automatically generated letters.
The UK treaty doesn’t have the “Assistance in collection” article, and therefore doesn’t have that explicit reciprocal protection for dual citizens. There’s no undertaking that the UK will assist with collection, but there’s also no guarantee that it won’t. 🙁
There’s a general HMRC policy against aiding in the collection of foreign debts, which presumably would apply.
@Norman Diamond – I had a look at the Japan treaty. Correct me if I’m wrong but it seems to be similar to the UK treaty in that there is no “Assistance in collection” article and therefore no explicit protection for dual citizens.
“I had a look at the Japan treaty. Correct me if I’m wrong but it seems to be similar to the UK treaty in that there is no “Assistance in collection” article and therefore no explicit protection for dual citizens.”
I vaguely remember something about assistance but it doesn’t matter. When I was a dual citizen, neither citizenship was Japanese. (Now my Canadian citizenship still isn’t Japanese.)
Anyway, when the IRS decides to try to collect, the IRS doesn’t seem to care about treaties (nor US statutes, constitution, or court rulings).
@Norman Diamond – “.. when the IRS decides to try to collect, the IRS doesn’t seem to care about treaties (nor US statutes, constitution, or court rulings).”
The crucial question for non-US-resident USPs, as I see it, is not what the IRS cares about but what the government of the country you live in cares about. Japan seems to have particularly complex rules, I gather from reading your posts and those from @JapanT. The UK less so, but things can change quickly and unexpectedly.
There is an interesting post on Jack Townsend’s blog that discusses the “assistance in collection” provision that exists in five U.S. tax treaties (Canada is one of the five). Mr. Townsend provides a bit of background on the common law “Revenue Rule”. This is helpful because it explains that:
1. The “Revenue Rule” has historically the “default rule”. In other words, Canada would not assist the United States in collecting taxes on Canadian residents.
2. The “assistance in collection” provision which is generally found in Article XXVI A of the Canada U.S. Tax Treaty essentially abolishes the “Revenue Rule”.
3. But S. 8 of Article XXVI A is confirms that the “assistance in collection” provision does NOT apply with respect to those who were Canadian citizens at the time the tax debt arose. It is notable that the language is very strong. It reads “No assistance shall be provided”. This is quite different from “Canada is NOT obligated to provide …” Now, in fairness, this means that the United States could never use the Tax Treaty to force Canada to assist the US to collect taxes on Canadian citizens resident in Canada. But, this doesn’t mean that the Government of Canada (of “A Canadian is a Canadian is a Canadian fame”) would not help the United States anyway. Nevertheless, it is significant that the “assistance in collection” section does NOT apply to Canadian citizens. In addition, this is an argument for why FATCA should not apply to Canadian citizens resident in Canada.
In any case, here is the link to the Townsend blog post:
where he provides some interesting background.
It’s fairly obvious that since the U.S. is the only country (Eritrea is not relevant) with “citizenship-based taxation” that the U.S. has by far the most to benefit from “assistance in collection provisions”.
Thanks for including the information about enrolled agents and Circular 230. The full text of Circular 230 is here:
If you look at pages 6 and 7 you will see that the provisions of Circular 230 apply to attorneys, CPAs and Enrolled Agents who practice before the IRS. This is significant because the rules that you identify as applying to Enrolled Agents, apply equally to attorneys and CPAs (as they are defined).
Therefore, it seems to me that the question you ask about whether a Canadian lawyer who is an “Enrolled Agent” has a possible “conflict of interest”, should also be asked in the cases of:
Canadian lawyers, (1) practising in Canada who are also (2) members of the Bar in various U.S. states who (3) practise before the IRS.
To put it another way: what applies to the Enrolled Agent practicing in Canada should apply to the U.S. lawyer practising in Canada. And what about all the U.S. licensed CPAs who are pratising in Canada.
Bottom line: This is a very serious problem.
The question is: Who is the tax professional’s client? Is it the person paying the tax professional or is it the IRS?
This issue reminds of the following post that was written a few years ago:
So what countries do assist the irs in collecting taxes and penalties in other countries? Does anyone know if this has happened so far?
Canada, Denmark, France, Sweden, Netherlands.
@2terrified2sleep, I am not a lawyer or an expert. But these are some of the sources we have considered in the past here, at least for the Canadian context http://isaacbrocksociety.ca/2016/04/18/april-14-2016-canadian-parliament-ethi-standing-committee-on-access-to-information-privacy-ethics/comment-page-1/#comment-7484645 . I don’t know anything about the context of Denmark, France, Sweden, Netherlands.
Conflict of Laws. Judgments. Canadian Court Will Not Entertain Suit to Enforce United States Tax Judgment. United States v. Harden (Can. 1963)
Harvard Law Review
Vol. 77, No. 7 (May, 1964), pp. 1327-1330
Published by: The Harvard Law Review Association
Stable URL: http://www.jstor.org/stable/1338831
“….The IRS’s broad lien and levy powers against assets, however, has significant limitations overseas. See the 1998 Treasury Report – Sometimes Old is as Good as New – 1998 Treasury Department Report on Citizens and LPRs, I havp 45 report on Citizens Residing Oversease worked with IRS Revenue Officers who specialize in international collection matters who argue and assert they can merely exercise this lien and levy power overseas against foreign financial institutions. However, this is where the power of the IRS comes to a screeching halt (or at least a major slowdown); when the collection of overseas assets is at stake.
The IRS is not without remedies to collect foreign assets, but it is not a simple process; if it can be done at all in any particular circumstance.
The IRS has no specific enforcement provisions negotiated in international treaties that will necessarily enable them to enforce and collect U.S. income taxes overseas with foreign government assistance…….”
Read entire article above for the author’s reasoning.
And there is also this Canadian article;
CANADIAN TAX jOURNAL / REVUE FISCALE CANADIENNE (2012) 60:2, 305 – 54
‘FATCA and FBAR Reporting by Individuals:
Enforcement Considerations from a
Note that there is an important distinction between the collection of a US ‘tax’ vs. FBAR penalties – at least in the Canadian context. As described in this letter from then Finance Minister Flaherty (who would go on to renege on his commitment not to FATCA us): “……. we have also been clear that penalties imposed by the IRS under FBAR will not be collected by the Canada Revenue Agency (CRA) on their behalf. While the Canada-United States Income Tax Convention contains a provision that allows for the
collection by a country of taxes imposed by the other country, this does not apply to
penalties imposed under laws that impose only a reporting requirement. Furthermore, the
CRA does not and will not collect the US. tax liability of a Canadian citizen if the
individual was a Canadian citizen at the time the liability arose (Whether or not the
individual was also a U.S. citizen at that time)…….”
Flaherty to Dr. Haggie, Canadian Medical Association, January 2012
and the CRA said:
“….The CRA has previously indicated that Canada would assist the U.S. Government in the collection of interest and penalty in respect of U.S. taxes owing pursuant to Article XXVI-A of the Treaty. However, paragraph 8 of Article XXVI-A provides that Canada will not assist in the collection of a revenue claim from the U.S. Government in respect of an individual who is a Canadian citizen, such as the individual described in your hypothetical situation.
In addition, we are of the view that a civil penalty, such as the FBAR Penalty, which is imposed under the U.S. Bank Secrecy Act, is not a penalty in respect of U.S. taxes owing. Therefore, it is our view that an FBAR Penalty is not an amount that would be considered a revenue claim pursuant to the definition at paragraph 1 of Article XXVI-A.
We trust that our comments will be of assistance.
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch”
Thanks for the clarification. It’s so scary and frustrating to be caught in all of this. I (and I’m sure many others) appreciate the help from all of you. I should never have spent so much money on streamlined filing but I was scared of the fbar penalties and I will have an inheritance in the US from my father. I just didn’t want to risk it.
@2terrified2sleep, having a US connection definitely does add to the dilemma. And I know firsthand about the fear and the frustration, and the cost of trying to comply. The US deliberately fostered and heightened the fear to use as a weapon against those abroad, and does nothing to make things clearer or easier for those that it demands compliance from. If compliance with what the US demands from those outside the US wasn’t so punitive, confiscatory and expensive, the lineups to renounce wouldn’t be so long.
“The crucial question for non-US-resident USPs, as I see it, is not what the IRS cares about but what the government of the country you live in cares about. Japan seems to have particularly complex rules, I gather from reading your posts and those from @JapanT.”
I think the Japan-US tax treaty is simpler than the Canada-US tax treaty. I don’t think Japan makes any other rules about the US IRS. But it doesn’t matter, because the IRS doesn’t care about US law, so who thinks the IRS would care about Japanese or Canadian law?
Besides, the IRS abuses non-US-resident NON-USPs (i.e. US Non Resident Aliens) just as much as it abuses non-US-resident USPs.
It only helps a little bit if a signatory to a tax treaty obeys parts of the tax treaty. Financial institutions aren’t signatories to tax treaties, and financial institutions help the IRS whenever they want.
Re: Canada will not help the US collect tax debt for resident Canadian citizens.
That is what the tax treaty says.
The FATCA IGA, IMO, goes 100% against the tax treaty. Is not identifying US persons and providing account information and other personal details on them (CRA to IRS) isn’t that helping the US? They can’t collect anything without first identifying individuals and accounts.
I say in this regard the FATCA IGA is a direct violation of the tax treaty!
The CRA also has a “two faced” white lie on their website talking all about how the CRA will be handing over to the IRS personal and account details. And, oh by the way we will never help the US collect a tax debt, as if this FATCA IGA info is not helping the US !
I am willing to contribute to this lawsuit!
“….Is not identifying US persons and providing account information and other personal details on them (CRA to IRS) isn’t that helping the US? They can’t collect anything without first identifying individuals and accounts.”
Prof. Allison Christians told Parliament re the FATCA IGA and enabling legislation and assistance in collection:
“……..There are long-standing limitations on how we and how countries generally react to the revenue and penal laws of other countries. We call these limitations the “revenue rule”. The revenue rule says that Canada won’t lend assistance to the U.S. to collect U.S. debts of people who were Canadian citizens when the debts arose. Period, full stop, no qualifications. To amplify this point, Canada does not assist in tax collection in any case unless the U.S. tax claim has been finally determined after a full measure of due process. Put this another way, we have a long history of not assisting or allowing other countries to engage in revenue collection activities in Canada for their own tax purposes.The U.S. has a very similar, if not stricter position.
But FATCA, as reflected in the bill before us today, tells us to ferret out our own citizens as likely U.S. tax debtors and present them and their financial resources to our most important treaty partner in an agreement of dubious status that may not even be a tax treaty. The bill suggests that this will be done in furtherance of the existing tax treaty. It goes significantly further. It forces us to ask ourselves how we can open our citizens and their money to the U.S., yet claims this does not constitute lending assistance. Canada must protect Canadians, and that is what the lending assistance rule and the limits on information disclosure do. They assert that the U.S. should have no enforceable tax claim that should be assisted by Canada on Canadians.
We need to make clear we won’t take part in any enforcement in any form of assistance, whether it be in information or collection when ·it comes to Canadian citizens. I believe that is the spirit in which the government has accepted the terms of FATCA in the bill before the committee today, but this spirit must be reflected in the law. We cannot use a phrase like “information gathering” to blind ourselves to what is really occurring. Information sharing is not the end, it is the beginning. Our information exchange must also comply with Canadian law concerning when Canadian tax officials may divulge confidential taxpayer information. The law is not ambiguous: an official may disclose protected taxpayer information when we have agreed to do so under a tax treaty or other listed international agreement and not otherwise……”……
Standing Committee on Finance
Tuesday, May 13, 2014
“s a treaty override that comes with great cost and consequence to governments, financial institutions, and most of all human beings, FATCA stands as an ongoing violation of long-standing cooperative efforts on taxation by the international community of states. It is in danger of undermining that cooperation by forcibly engaging the whole world in the project of compelling global compliance with just one tax jurisdiction, and the planet’s most expansive one at that. No compensation has been offered for the breach, and no remuneration is being offered for the cost of complying with the new, unilaterally imposed conditions. Moreover, scant attention appears to have been paid to the fact that accepting the treaty override in this particular case means assisting the US in expanding its extraterritorial enforcement with respect to taxpayers who by overwhelming international consensus do not belong in the US tax net at all. This puts treaty partners in the odd position of accepting a violation of foundational international tax norms based in the residence principle, against residents of their own jurisdictions, and at their own cost. ………”
‘Tax Cooperation, Past, Present & Future’
By Professor Allison Christians, H Heward Stikeman Chair in Tax Law, McGill University Faculty of Law, Montreal, Quebec, Canada (01/03/2014)
She also said;
“…”This bill suggests that this will be done in furtherance of the existing tax treaty. It goes significantly further,” said Christians. “It forces us to ask ourselves how we can open our citizens and their money to the U.S., yet claims this does not constitute lending assistance. Canada must protect Canadians, and that is what the lending assistance rule and the limits on information disclosure do. They assert that the U.S. should have no enforceable tax claim that should be assisted by Canada on Canadians.”
“We need to make clear we won’t take part in any enforcement in any form of assistance, whether it be in information or collection when it comes to Canadian citizens… We cannot use a phrase like “information gathering” to blind ourselves to what is really occurring. Information sharing is not the end, it is the beginning. Our information exchange must also comply with Canadian law concerning when Canadian tax officials may divulge confidential taxpayer information.”..”
Christians and Cockfield said;
“…Canada should only transfer data associated with U.S. persons who are not Canadian residents. This approach accords with longstanding practice and emerging global information exchange standards….”
“…Canada’s Department of Finance has indicated that
it will protect this predominate claim with respect to the collection of penalties and taxes, in
accordance with article 26A of the Canada-US tax treaty. That article states that no
assistance shall be provided to the United States in a “revenue claim” involving a person
who was a citizen of Canada at the time the revenue claim arose.43 A revenue claim is
defined in the treaty to include taxes, interest, costs, additions to taxes, and civil penalties.44
This protection of Canada’s predominate claim over Canadian citizens is not
explicitly stated in the legislative proposal, nor does it go far enough. It should be extended
to collection of information related to any other revenue claim items, since such collection
by Canada would serve no purpose given the limitation on assistance in collection…”
Christians, Allison and Cockfield, Arthur J., Submission to Finance Department on Implementation of FATCA in Canada (March 10, 2014). Available at SSRN: https://ssrn.com/abstract=2407264 or http://dx.doi.org/10.2139/ssrn.2407264
@Norman Diamond – “Financial institutions aren’t signatories to tax treaties, and financial institutions help the IRS whenever they want.”
If FIs were able to help the IRS whenever they want, IGAs would not have been needed. FIs, like individuals and government agencies, are subject to local law.
I would expect that attorneys, barristers, solicitors, jurists, lawyers–whatever you call them– should be expected to explore every angle to defend their clients’ interests. Merely copy-pasting the most recent compliance-vulture procedures is malpractice in my opinion.