FATCA Canada & the IRS

FATCA Canada & the IRS

What is FATCA Canada?

FATCA Canada: For Americans living in Canada and concerned about the IRS and FATCA Reporting of Canadian Accounts and Assets, the noose has just gotten a bit tighter — due in part to a recent court holding in Canada.

A Judge in the Federal Court of Canada dismissed an appeal on behalf of Americans residing in Canada, who – like millions of other expats worldwide – believe FATCA reporting is unfair.

FATCA Canada Explained

The U.S. and Canada have several tax treaties in place, including a Bilateral Tax Treaty, Totalization Agreement (Social Security) and FATCA Agreement.

The FATCA Agreement requires Canadian FFIs (Foreign Financial Institutions) to report U.S. accountholders to the IRS. Likewise, the FATCA Agreement is reciprocal and requires the U.S. to report to Canada as well.

Once the FFI reports to the IRS, the clock starts ticking.

If the IRS, DOJ or DOT contacts the U.S. accountholder before he or she has a chance to get into IRS Offshore Tax Amnesty, and submit to IRS Offshore Tax Compliance — the person will miss the chance to get into compliance.

Important Case Takeaways re: Americans in Canada & FATCA

As provided by the Federal Court in Canada:

“That said, and focussing on the impact of the Impugned Provisions as I am required to do, at the end of the day, the effect of the Impugned Provisions is to compel U.S. persons in Canada to comply with their pre-existing obligations under American tax laws.

The Charter does not require Canada to assist persons resident in this country in avoiding their obligations under duly-enacted laws of another democratic state, nor does it require this country to shelter those living in Canada from the reach of foreign laws.

Indeed, as was noted earlier, insulating persons resident in this country from their obligations under duly-enacted laws of another democratic state is not a value that section 15 of the Charter was designed to foster.”

“While these individuals’ frustration may be understandable, when viewed objectively, the decision of the Canadian government to share these individuals’ banking information with the IRS because their American citizenship or national origin makes them subject to American tax laws does not devalue their worth as individuals.

Nor does it send the message that U.S. persons are less capable or less worthy of recognition as human beings or as members of Canadian society. It is thus not discriminatory.”

U.S. Persons are at Risk

Whether a U.S Citizen, Legal Permanent Resident, or certain Visa Holders reside in the U.S., Canada, or a third-party country does not matter when it comes to Foreign Bank Account Reporting; they are still required to inform the foreign bank as to their US status (aka U.S. Status does not automatically change for U.S. Citizens or Legal Permanent Residents no matter where they live)

Thus, even though a person may be a Canadian citizen, and a U.S. green card holder and maintains accounts in Canada, with respect to IRS Tax Law, the Canadian Account is considered to be a “Foreign Account” and must be reported on an annual FBAR and FATCA Form 8938 (if the respective threshold requirements are met)

Non-Compliant Foreign Account Holders

When a person is out-of-compliance for not properly reporting their foreign accounts, the IRS has developed various programs to assist taxpayers with getting back into compliance.

These programs are collectively referred to as Offshore Voluntary Disclosure. Several of the programs may result in minimal penalties, or even full penalty waivers.

Golding & Golding: About Our International Tax Law Firm

Golding & Golding specializes exclusively in international tax, and specifically IRS offshore disclosure

We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe. Our attorneys have worked with thousands of clients on offshore disclosure matters, including FATCA & FBAR.

Each case is led by a Board-Certified Tax Law Specialist with 20 years of experience, and the entire matter (tax and legal) is handled by our team, in-house.

*Please beware of copycat tax and law firms misleading the public about their credentials and experience.

Less than 1% of Tax Attorneys Nationwide Are Certified Specialists

Sean M. Golding is one of less than 350 Attorneys (out of more than 200,000 practicing California Attorneys) to earn the Certified Tax Law Specialist credential. The credential is awarded to less than 1% of Attorneys.

Recent Golding & Golding Case Highlights

  • We represented a client in an 8-figure disclosure that spanned 7 countries.
  • We represented a high-net-worth client to facilitate a complex expatriation with offshore disclosure.
  • We represented an overseas family with bringing multiple businesses & personal investments into U.S. tax and offshore compliance.
  • We took over a case from a small firm that unsuccessfully submitted multiple clients to IRS Offshore Disclosure.
  • We successfully completed several recent disclosures for clients with assets ranging from $50,000 – $7,000,000+.

How to Hire Experienced Offshore Counsel?

Generally, experienced attorneys in this field will have the following credentials/experience:

  • Board Certified Tax Law Specialist credential
  • Master’s of Tax Law (LL.M.)
  • 20-years experience as a practicing attorney
  • Extensive litigation, high-stakes audit and trial experience
  • Dually Licensed as an EA (Enrolled Agent) or CPA

Interested in Learning More about Golding & Golding?

No matter where in the world you reside, our international tax team can get you IRS offshore compliant. 

Golding & Golding specializes in FBAR and FATCA. Contact our firm today for assistance with getting compliant.