It looks like you're using an Ad Blocker.
Please white-list or disable AboveTopSecret.com in your ad-blocking tool.
Thank you.
Some features of ATS will be disabled while you continue to use an ad-blocker.
Janet Selby never imagined she was anything other than a Canadian. After all, she has lived in Canada for all of her 47 years. She went to school here, voted in elections, travelled on a Canadian passport and built a successful career as an accountant and corporate recruiter.
But a recent call from her online broker forced her to confront a long-forgotten past. Ms. Selby spent the first four days of her life in the United States, born in 1963 to two Canadians pursuing graduate work at the University of Illinois in Champaign, Ill.
That makes Ms. Selby an accidental American – a reality that comes with sweeping tax and reporting obligations that could now cost her thousands of dollars and a monster headache. “It’s frustrating,” Ms. Selby said from Toronto, where she has lived most of her life. “I’m a responsible citizen. I’ve paid my taxes dutifully since I’ve been earning money. It makes me feel like it’s an overreaching tax grab by the Americans.”
The IRS Reach Now Extends Into Canada
Hundreds of thousands of Americans living in Canada may soon run into the increasingly long and muscular arm of the U.S. Internal Revenue Service. Many aren’t aware of what is about to hit them as Canadian financial institutions comply with a new law that requires them to identify their U.S. customers to the IRS, tax experts warn. Banks and customers who fail to provide the information would be hit with steep penalties on all their U.S. income.
Starting in 2013, the IRS will require foreign financial institutions – banks, brokers, insurers and the like – to disclose all accounts held by U.S. citizens and green-card holders.
Mr. Flaherty also took issue with another U.S. Internal Revenue Service crackdown aimed at dual U.S.-Canadian citizens and their relatives living in Canada.
The “threat of prohibitive fines for simply failing to file a return they were unaware they had to file, is a frightening prospect that is causing unnecessary stress and fear among law abiding hardworking dual citizens,” Mr. Flaherty wrote.
He said most of these Canadian citizens — many with only distant links to the United States — have a very limited knowledge of their tax reporting obligations to the United States. They are “honest and law-abiding people, including many senior citizens now caught in a nerve-wracking situation,” Mr. Flaherty wrote.
He noted that many work and pay taxes in Canada, meaning they do not owe any taxes in the United States in any event.