# When will the CRA collect taxes for the IRS?



## pwdunn

In the fact sheet from the government of Canada it says:

Penalties imposed under FBAR will not be collected by the Canada Revenue Agency (CRA): The Canada-United States Income Tax Convention contains a provision which allows for the collection by a country of taxes imposed by the other country, including civil penalties. This provision does not apply to penalties imposed under laws, such as the U.S. Bank Secrecy Act, that impose only a reporting requirement (as opposed to those that impose taxation along with reporting requirements). Also, CRA does not and will not collect the U.S. 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).​
Now here is my question:

I do not owe anything to the IRS but have decided to co-operate no further with the IRS. Except now I learn that under certain circumstances, the CRA will collect for the IRS. This leaves me vulnerable because I only became a citizen this year.

In a recent letter the IRS has informed me that my 2009 tax return is overdue. This is hopeful on their part, since in the 10+ years or so that I've filled out these frivolous returns, which have cost me plenty to have prepared, I've never owed a red penny. Now they say this:

Failure to file your return and pay any tax due can result in the following:
- further administrative action, including, but not limited to, assessing your tax based on information we have received, and
- additional civil and criminal penalties.​
This is so typical of government. Threaten. Offer to send the recipient of the letter to a federal prison, for they presumed to be criminals! But I say that the true criminals are in government. Has anyone seen the deficit in the states lately? Does anyone think that the US government will ever pay back what it is borrowing? Does anyone think that they will make good on the trillions of unfunded liabilities? It reminds me of a joke. Two men met on the subway and strike up a conversation. One asks, "What do you do?" The second says, "I'm in organized crime." The first says, "Oh, is that in the government or the private sector?"

Now, the information that they received about me regards sales of stocks--but of course, these were declared in my Canadian tax and capital gains taxes were paid here, so that there can be nothing owed in the US. But of course, they only know about the stocks sales, and can thus assess an arbitrary amount of tax to pay on that and whatever else they decide that I owe based upon presumed income levels, with penalties to boot.

This is why I got rid of my US citizenship. I cannot be harassed by the taxman on both sides of the border. But if the CRA is going to collect for the IRS (as I was not a Canadian citizen in 2009), which is stupid since I owe no tax, then I better file the stupid information return. It is prepared already, but I've been biding my time contemplating what I shall do.

But I will be putting "FIFTH AMENDMENT" on any line which may lead to an FBAR penalty.

Any IRS agent reading this, I will stress to you this: I am an innocent persecuted person that you have put in an embarrassing situation. I know that shame doesn't work on you, but nevertheless, be aware that one day justice will roll like a river. You have nothing to gain by making an example of me.


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## Mona Lisa76

I may not like it but it's the law.


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## Cafreeb12

Sometimes when the law is wrong then actions need to be taken. It used to be the law that African Americans and women couldn't vote too among other "laws" that have trampled peoples rights. These FBAR fines on zero taxes owed are persecuting innocent middle income families, retirees and in some cases people who are not even American citizens. 

It's the law, but, it's wrong. Laws like this never get changed unless they are somehow put in the sunlight and exposed, and protested.


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## pwdunn

Cafreeb12 said:


> Sometimes when the law is wrong then actions need to be taken. It used to be the law that African Americans and women couldn't vote too among other "laws" that have trampled peoples rights. These FBAR fines on zero taxes owed are persecuting innocent middle income families, retirees and in some cases people who are not even American citizens.
> 
> It's the law, but, it's wrong. Laws like this never get changed unless they are somehow put in the sunlight and exposed, and protested.


In this case, the action that needs to be done may be open protest. All of us are hiding behind assumed names as though we have something to hide. But I've decided to come out in the open with my protest.


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## Cafreeb12

PetrosResearch said:


> In this case, the action that needs to be done may be open protest. All of us are hiding behind assumed names as though we have something to hide. But I've decided to come out in the open with my protest.


It is easy enough for them to figure out who I am due to plenty of statements I've made about myself over these last few months, my location, my affiliations in past elections, even by my username which is the same one I used with democrats abroad for three years before I left that "club". I suppose I really don't care that much since I'm turning over all my details to them anyway when I renounce. I've done nothing wrong that would warrant such a close inspection or a fine for that matter. Never the less they will impose one if they want to arbitrarily. 

I agree a public protest is in order. Also, if you want to you can contact ACA again and tell them if they would like to use your name when sharing the stories. The impact might be something bigger than what we see now.. Some of our families south of the border need to speak up too.


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## Peg

Accoring to this October 15th article, The U.S. estate tax laws <br/>and proactive planning - The Globe and Mail by 2013, if you own assets worth more than $60,000 in US real estate or securities at the time of death, and your worldwide estate is greater than $1 million, *your estate may be subject to U.S. tax*!

Would that mean mutual funds from Canada that hold US stocks? What about time shares? There are many people who have bought a condo in the US!

Would CRA collect that estate tax? The article said "may be subject" - what criteria?

I know many people that would fit the $1M and $60k amounts...


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## Cafreeb12

Peg said:


> Accoring to this October 15th article, The U.S. estate tax laws <br/>and proactive planning - The Globe and Mail by 2013, if you own assets worth more than $60,000 in US real estate or securities at the time of death, and your worldwide estate is greater than $1 million, *your estate may be subject to U.S. tax*!
> 
> Would that mean mutual funds from Canada that hold US stocks? What about time shares? There are many people who have bought a condo in the US!
> 
> Would CRA collect that estate tax? The article said "may be subject" - what criteria?
> 
> I know many people that would fit the $1M and $60k amounts...


Peg, this is another reason for me to renounce. Going forward, even with out FATCA when I die I want everything I have and it isn't much to go to my son. With his disabilities handling onerous and confusing U.S. tax forms and requirements is a burden I will not pass on to him. The mutual funds portion has me worried and I'm not clear on all the things they require but, it seems to me from what reading I've done that it's certainly a burden on heirs.


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## AmTaker

PetrosResearch said:


> Now, the information that they received about me regards sales of stocks--but of course, these were declared in my Canadian tax and capital gains taxes were paid here, so that there can be nothing owed in the US. But of course, they only know about the stocks sales, and can thus assess an arbitrary amount of tax to pay on that and whatever else they decide that I owe based upon presumed income levels, with penalties to boot.


How did the IRS know about your stock sales ? Were they held in an American brokerage account ?


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## pwdunn

AmTaker said:


> How did the IRS know about your stock sales ? Were they held in an American brokerage account ?


You fill out a W-8 (I think) when opening a Canadian brokerage account, and they take down your SSN. If you have stock sales in the US the brokerage reports them.


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## Guest

Peg said:


> Accoring to this October 15th article, The U.S. estate tax laws <br/>and proactive planning - The Globe and Mail by 2013, if you own assets worth more than $60,000 in US real estate or securities at the time of death, and your worldwide estate is greater than $1 million, *your estate may be subject to U.S. tax*!
> 
> Would that mean mutual funds from Canada that hold US stocks? What about time shares? There are many people who have bought a condo in the US!
> 
> Would CRA collect that estate tax? The article said "may be subject" - what criteria?
> 
> I know many people that would fit the $1M and $60k amounts...


Think about selling every mutual fund or stock that has any US-source connections and using the money to buy Canadian-only bonds and other investments, now before it's too late (i.e. before you die, and before the IRS figures out yet another way to screw you out of your money). Pull every penny out of the US economy, reinvest it in the country that's housed and protected (and I hope will continue to protect) you, and let the US go bankrupt without taking your hard-earned money with them.


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## pwdunn

Well, I'm not sure that this is worth a new thread, but I think we can all rejoice that the IRS is downsizing as many as 5400 jobs in the near future. My enemy falleth on his own sword.


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## Cafreeb12

PetrosResearch said:


> Well, I'm not sure that this is worth a new thread, but I think we can all rejoice that the IRS is downsizing as many as 5400 jobs in the near future. My enemy falleth on his own sword.


I'm actually sorry for the average every day people who will lose their jobs at the IRS. Job loss is a terrible experience but, it seems this administration hasn't a clue what they are doing at all. First, they say they will "HIRE" eight hundred agents then they are laying off over five thousand? No one knows what is in bills they sign, no one cares and they come out in the press and back slap each other silly over these misguided measures which are then lauded as "accomplishments" by the press. If you still live in the U.S. please run for office, locally and nationally. You cannot possibly no matter your position in life do a worse job than this.


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## Pathologic1

*Canadians*

I just have to repeat what LegalBeagle presented on another thread. I think it is important that Canadian citizens understand it!!!

If you are a Canadian the US* cannot * collect from you in Canada. They cannot even collect taxes owed through the CRA if you were a Canadian citizen during the period they say you owe taxes from. They cannot collect FBAR fines. Basically if you were a Canadian citizen and it is not a criminal matter you can freely ignore the IRS. 

To reproduce LegalBeagal's post found here
http://www.expatforum.com/expats/ca...ion-canada-recent-leagl-research-article.html

_"You should be aware that US has no direct legal power in Canada to collect taxes here; it cannot seize Canadian property, bank accounts or wages. Only Canada Revenue Agency can collect taxes in Canada. And only Canadian courts can enforce judgements here.

Canadian courts will not enforce US tax claims or judgements because of the longstanding rule that a sovereign state will not collect taxes for the benefit of a foreign state. This was affirmed in a Supreme Court of Canada judgement.

The Canada - US tax treaty has an assistance in collection provision. However, Canada Revenue will not collect US tax or penalties from Canadian citizens (including dual Canada-US citizens or US-born Canadian citizens) unless the tax claim pre-dates their Canadian citizenship. This is reciprocated by US: they will not collect Canadian taxes from US citizens in their country.

Also, Canada will not collect any US bank reporting penalties in Canada. "Thus, FBAR penalties are not collectible under article XXVI A (of the Tax Treaty) because they are not income or capital taxes or taxes imposed under the Code or related penalties." It is unlikely these would be recognized by Canadian courts as well, because "they are penal and thus are not enforceable in Canada."_

It doesn't mean anything if you weren't a Canadian during the period they say you owe them but you can ignore everything from the US gov after you were a Canadian without significant risk. This obviously doesn't apply to criminal activity or property you may have in other jurisdictions, especially the USA or if your are planning on moving assets to the USA.


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## pwdunn

Pathologic1 said:


> I just have to repeat what LegalBeagle presented on another thread. I think it is important that Canadian citizens understand it!!!
> 
> [snip]
> 
> It doesn't mean anything if you weren't a Canadian during the period they say you owe them but you can ignore everything from the US gov after you were a Canadian without significant risk. This obviously doesn't apply to criminal activity or property you may have in other jurisdictions, especially the USA or if your are planning on moving assets to the USA.


Ok. Thanks. However, I will repeat what I said in the initial post:

I do not owe anything to the IRS but have decided to co-operate no further with the IRS. Except now I learn that under certain circumstances, the CRA will collect for the IRS. *This leaves me vulnerable because I only became a citizen this year.*​
Now note also that the letter from the IRS regards my 2009 taxes, which were paid in Canada and therefore nothing is owing to the IRS. I thought I could just ignore them, but apparently the tax treaty will allow the CRA to collect for the IRS from a non-Canadian, even if that person paid his taxes in Canada. Now the stupid thing about this is that I could subsequently file a revised 2009 Canadian tax and get a credit, so obviously it is not in the interest of the CRA to collect anything for the IRS.

*So my initial question to this forum is under what circumstance will the CRA collect from non-Canadians in Canada for the IRS? *I feel I must respond to the demand for information from the IRS because they could otherwise assess me a large bill based on little information that the CRA would then collect for them.

Again thanks, and hopefully this makes my initial question clearer.


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