1.6 Canadian Banking Records Shared with the IRS
If you are a U.S. taxpayer with assets in Canada, this is a development that you should be following closely. This applies especially if you have not been reporting your offshore accounts to the IRS.
The Canadian government has shared more than 1.6 million Canadian banking records with the U.S. Internal Revenue Service since the start of a controversial information-sharing agreement in 2014, CBC News has learned.
In 2016 and again in 2017, the Canada Revenue Agency provided the IRS with information on 600,000 Canadian bank accounts each year. That's a sharp increase from the 300,000 records shared in 2015 and the 150,000 records shared in 2014, the year the sharing began.
However, that doesn't necessarily correspond to the number of people affected. Some people may have more than one bank account, while some joint accounts could have more than one account holder — including people who don't hold U.S. citizenship.
Among the items of Canadian bank account information being shared with the U.S. are the names and addresses of account holders, account numbers, account balances or values, and information about certain payments such as interest, dividends, other income and proceeds of disposition.
The information transfer is the result of a controversial information sharing agreement between Canada and the U.S. negotiated in the wake of the American government's adoption of the Foreign Account Tax Compliance Act (FATCA). The act, adopted in a bid to curb offshore tax evasion, obliges foreign financial institutions to report information about accounts held by people who could be subject to U.S. taxes.
The Canadian government argued that negotiating the information-sharing agreement would be better than forcing Canadian banks to deal directly with the IRS. Under the agreement, Canadian financial institutions send information on accounts held by clients with U.S. indicia (such as the account-holder being born in the United States) to the CRA; once a year, the CRA then forwards the information to the IRS.
Federal Court of Canada Prepares to Hear Challenge
The revelation that 1.6 million records have been shared with the U.S comes as the Federal Court of Canada prepares to hear a constitutional challenge of the information-sharing agreement next week in Vancouver.
Those challenging the agreement argue that it violates sections 7, 8 and 15 of Canada's Charter of Rights, which protect Canadians from violations of their right to life, liberty and security, unreasonable search and seizure and discrimination against those who hold U.S. as well as Canadian citizenship.
In its submission to the court, the plaintiffs argue that some of the people whose banking records have been shared with the IRS may not be subject to U.S. taxes.