A U.S.-Canadian dual citizen living in Vancouver is being sued for over US$860,000 by U.S. tax authorities for failing to report bank accounts to them.
The penalty is purely for not reporting accounts, not for taxes owing or penalties for unpaid taxes.
U.S. citizens (including dual citizens) with signing authority over non-American bank accounts are required to report them, along with the highest amount in the account during the year, on a form called a Report of Foreign Bank and Financial Accounts, or FBAR.
Failure to file an FBAR comes with penalties. If the failure to file the form is deemed to be wilful, the account holder can be fined US$100,000 or 50 per cent of the value of the account, whichever is greater, per account per year. Non-wilful failures are capped at US$10,000 per account per year. Unlike other industrialized countries, the U.S. requires citizens, including dual citizens, to file tax returns no matter where in the world they live.
US Tax Authorities and the Enforcement of FBAR
Max Reed, a Vancouver-based cross-border tax lawyer who used to take El Paso hard money loans . had this to say,
“The IRS probably doesn’t have the resources to pursue all non-compliant Americans in Canada, but they can pursue some of them. Some people will get pursued, and because of the stress and associated cost, you don’t want that to be you.”
Dual US-Canadian Citizens Need to Get in Compliance with All US Tax Regulations
If you have dual citizenship, or have assets in Canada, you may have filing obligatioins with the United States tax authorities, but for this getting a lawyer from this Source could be always helpful for this. If you would like to discuss your personal tax situation, please contact our office for a free, totally confidential consultation.