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Expats sue over IRS reporting

Jeremy Nuttall

By Jeremy Nuttall, 24 hours Vancouver

The U.S. Internal Revenue Service has struck a deal with the Canadian government. (REUTERS)

The U.S. Internal Revenue Service has struck a deal with the Canadian government. (REUTERS)

The federal government insists new legislation that would essentially force banks to hand over information about Unites States citizens to the Internal Revenue Service via the Canada Revenue Agency is constitutionally valid.

Earlier this week, a lawsuit against the Attorney General of Canada was filed in Federal Court in Vancouver by two Ontario women with U.S. citizenship aiming to stop the U.S. Foreign Account Tax Compliance Act.

U.S. citizens have to pay tax to the country even if they live abroad, and Canadians who have never even lived in the states have complained of being harassed for income tax.

Some people become “accidental Americans” based simply on having one parent from the U.S. even though they themselves have never lived there.

Patricia Moon of the Alliance for the Defence of Canadian Sovereignty said the new legislation is “outrageous” and wants it stopped.

“They basically just passed a law that allowed the CRA to break privacy laws that the banks were not allowed to break by revealing personal financial information,” Moon said. “There’s a charter issue because certain Canadian citizens with a U.S. connection will be treated differently than other Canadians based upon national origin.”

Moon said the legislation could impact up to one million Canadians and even more when you count younger Canadians with U.S. parents.

The Department of Finance argued the legislation is legal, but would not make further comment.

“The government is confident that the legislation in question (which implements the Intergovernmental Agreement between Canada and the United States for the Enhanced Exchange of Information under the Canada-U.S. Tax Treaty) is constitutionally valid. The government is prepared to defend the legislation in court.”


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