The idea that a Canadian MP could be subject to #FBAR and other IRS penalties is ridiculous: "Andrew Scheer will not follow through with plans to renounce U.S. citizenship" /via @globeandmail https://t.co/BZ3tO3kIFC
— U.S. Citizen Abroad (@USCitizenAbroad) May 18, 2020
The Globe and Mail was the first to break the story about Andrew Scheer’s dual Canada US citizenship. Mr. Scheer’s US citizenship generated a number of comments on Brock.
The above tweet references the follow-up article in today’s Globe and Mail. I believe it’s unlikely that Mr. Scheer ever started the process to relinquish US citizenship. But, who really knows?
A couple of thoughts:
1. The comments on the Globe article are accelerating. Interestingly not a single comment so far has addressed the issue of US citizens being subject to IRS jurisdiction. Is it tolerable for a Canadian MP (including a Party Leader) to be a “US citizen”? The problem is that dual citizenship in general is not the same as dual citizenship when one of the citizenships is US. The difference is that US citizens are (as we all know) members of the World’s Premier “Tax, Form and Penalty Club”. Should Canadians tolerate a situation where their Prime Minister (or any MP) is subject to IRS jurisdiction?
2. Is it possible that Mr. Scheer implied/recognized that US citizenship is different from other citizenships. An August 13, 2005 blog post from Mr.Scheer included:
I have a few quick questions for anyone who thinks that Michaelle Jean is a good choice to be our next GG.
1) What are her qualifications? What experience does she have that would assist her to carry out her duties as our head of state, including the potential to be a referee in a minority government situation?
2) Does it bother you that she is a dual citizen (France and Canada)? Would it bother you if instead of French citizenship, she held U.S. citizenship?
3) It is being reported that her husband is quite chummy with some FLQers belonging to the same group that killed Pierre Laporte. If her husband was quite friendly with Al-Queda terrorists, would that be alright?
Is Mr. Scheer recognizing that not all citizenships are the same? For the purposes of being a Party Leader (and potential Prime Minister), is Mr. Scheer implying that there might be a difference between American citizenship and French citizenship?
He may or not be implying that there is a difference.
The reality is that no country, except the United States, should tolerate a head of state who holds US citizenship.
France does not threaten its citizens abroad with penalties.
Scheer is a lying hypocritical shit.
Canada-US dual citizens are only subject to IRS jurisdiction if either (1) for some perverse reason they want to be, or (2) someone in the tax business lies to them and tells them that they have no choice in the matter.
No, the US retains jurisdiction over its citizens despite the Tax Treaty. Regarding Canada-US dual citizens, it would be more accurate to say that for minnows, due to s. XXVIII(A)(6) of the Canada-US Tax Treaty, US tax law is generally not enforceable from a practical standpoint because CRA will not assist in collection against a dual here if they were a citizen of Canada at the time the tax debt arose. But it does not relieve the IRS of jurisdiction over the person nor legally relieve a person of an obligation to file.
Ron, seriously …
Scheer may be a lying hypocritical shit, but that is irrelevant to the question of tax residency and tax jurisdiction …
People are free to do what they want, but it seems to me that the following (at a minimum) must be understood:
To put it another way: The primary purpose of the treaty is to first guarantee double taxation and then provide relief in a limited number but significant areas.
Here is Article XXIX Section 2 of the Canada US Tax Treaty:
Canada has agreed to this. By doing so, Canada has agreed that:
1. The United States can impose full US taxation on US citizens who are also tax residents of Canada.
2. The United States can change the definition of US citizen (as per the FATCA IGAs) if and when it chooses to do so.
This is why significant effort needs to be channeled into getting these laws changed and/or possibly getting the treaty (as a group in Australia is trying to do) changed. If the laws can be changed, then one no longer needs to constantly preach non-compliance.
What the treaty does, (in return for a general commitment for assistance in collection), is exempt Canada from an obligation to assist in US tax enforcement on Canadian citizens. It’s unclear how helpful this will be as time goes on. This (as I have repeatedly said) does NOT mean that a US tax debt does not exist. Most people would prefer to NOT have a US tax debt at all. Is there a way that (over time) the USA can find a way to collect off residents from other countries without the assistance of the host government? I don’t know. But, I strongly believe that this question will be considered by the US Government.
Three suggested calls to action:
1. This is why public opposition to US extraterritorial taxation and public opposition to its inclusion in treaties is very important. (This is a political imperative. Individuals need to make this a political issue.)
2. This is why the various lawsuits (ADCS lawsuit in Canada and Jenny’s FATCA lawsuit in the UK) must be supported. (This can be done by anybody (even anonymously)).
3. It’s also why the discussion of Andrew Scheer’s US citizenship should be framed around these issues and NOT framed around the general theory/reality of dual citizenship. (Get over and comment at the Globe article.)
How should individuals respond to their own situations?
People are different and have different situations and different emotional orientations and different attitudes toward the USA and US citizenship. This is NOT “one size fits all”. In general …
I certainly agree that people should not (without careful consideration and education) sign up for punishment. I certainly agree that the tax community is the source of a lot of bad information. I absolutely agree that the compliance industry is not your friend. I certainly agree that people should think long and hard about entering the US tax system. I certainly think that those who are in a position to exit (by formally renouncing) should seriously consider this. But, it’s not helpful to pretend that these problems don’t exist.
I also believe that – with respect to “ignoring” or “denial”:
Ignoring this as a problem is NOT a long term solution and will make the problem worse and worse as the Internal Revenue Code applies more and more punitive tax laws to residents of other countries.
Denial of this as a problem is even worse. Denial will help a few in the short run at the high cost to the many in the long run.
It is almost a waste of time to get politicians of any stripe to address this issue.
1. Obama and the Democrats brought in FATCA (oops)
2. Harper signed the IGA ( Flaherty did clearly point out it’s failings but it went ahead anyway)
3. Trudeau criticized the agreement and vowed to do something ( he did nothing)
4. Trump’s crew vowed to get rid of FATCA and CBT but did nothing ( except make it worse if you own a business).
You are on your own in relation to this matter.
This subject comes up on Quora now and again.
There, as in the comments on this article it is perfectly clear that the vast majority of Canadians have no idea that a dual in Canada is first and foremost a US citizen subject to the jurisdiction of the US government and the IRS.
The Canadian government agreed as much when they signed the IGA and tax treaties.
Once this becomes clear and the extent of that jurisdiction is understood, no sane sovereign nation can have a US citizens in high positions of government, much less the prime minister.
And I agree that ignoring this is not a long term solution. The US government has shown itself to be an immoral lying bully of the first order and as long as CBT continues and other nations blithely accept that the US has a right to do this, nobody is safe.
Excellent list, but I’d add Andy…..
5. Andrew Scheer clearly doesn’t have a clue about what it really means to be a Canadian/US dual living (especially holding political office) in Canada because if he did, he would have gotten rid of his US citizenship years ago. By declining to address this problem in his own personal life, he has demonstrated that he would have zero inclination to address it on a larger scale.
In the case of Boris Johnson he bailed after he got stung by the IRS on real estate. I think his response to people in the U.K., In a similar situation was “I’m out of it” or there a-bouts. As I said you are on your own.
I copied JimA’s comment and moved the replies to it which discuss compliance to the Tax Compliance (or Not) Discussion Thread.
Will be interesting to see how the US markets adjust/ recover from covid. If the other big powers couldn’t bring the US down to size ,maybe something miniscule will.
Very disturbing that Andrew Sheer has decided not to renounce US citizenship. It seems to me he must be quite clueless as to the tax implications of being dual.
The US economy and impact from Covid 19 will be a very interesting situation. It indicates the poverty of their healthcare system and lack of public health funding as well. I also think that the virus may bring them down.