IRS vs American citizens living in Canada

Here is some information that SFB better listen to as the IRS now has her name I made sure of that:


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Americans in N.S. warned to file taxes

By BRUCE ERSKINE Business Reporter
Tue, Jul 26 - 4:54 AM

Americans living in Nova Scotia can’t afford to ignore the U.S. Internal Revenue Service, says a tax specialist with Grant Thornton LLP in Halifax.

"U.S citizens and U.S. green card holders have to file U.S. federal income tax returns regardless of where they live in the world and they have to report their worldwide income," Jason Hale said Monday said in an interview.

"American citizens living in Nova Scotia who aren’t filing tax returns with the IRS could be risking significant penalties."

Filing a United States tax return has always been mandatory for Americans living in Canada or for Canadians who hold U.S. citizenship. The combined total for both groups is estimated to top one million.

But Hale said the IRS has increased its scrutiny in recent years with help from U.S Customs and Border Protection.

"When the identification requirements changed for entry into the U.S., the simple act of crossing the border became an opportunity for the U.S. government to identify Americans and dual citizens living abroad," he said in a recent news release.

"U.S. Customs agents became, in effect, one of the IRS’s front-line assets."

The United States has also enhanced the tools the IRS uses to enforce American tax laws through measures such as the Foreign Account Tax Compliance Act, which takes effect in 2013.

Under the act, Canadian banking institutions will be required to report details on all Canadian accounts held by U.S. citizens.

Institutions that fail to do so will face a 30 per cent tax on all U.S. investment income and gross sale proceeds from U.S. stocks and securities.

"That’s a significant development," Hale said.

An IRS amnesty program offered under the Offshore Voluntary Disclosure Initiative, which expires in August, sets a maximum 25 per cent penalty on foreign account balances.

Grant Thornton has fielded dozens of calls in advance of the amnesty deadline.

Many were from long-term Canadian residents unaware of their U.S. tax filing obligations since they pay taxes in Canada and hadn’t been targeted previously by the IRS.

Hale didn’t know how many Americans there are living in Nova Scotia who may be affected by the tighter U.S. regulations, but he suggested the number was significant.

"It would be in the thousands," he said, noting there was an influx of Americans to Canada in the 1970s and during the George W. Bush era.

A spokeswoman with the U.S. consulate in Halifax said Monday there are an estimated 25,000 U.S. citizens living in Atlantic Canada.

No provincial breakdown was available and the consulate said inquiries about the tax issue haven’t been out of the ordinary compared with inquiries about other issues.

( berskine@herald.ca)