This is the first of two blog posts (Part 1 and Part 2) that discuss the University of Washington Low Income Tax Clinic report referencing a dual Canada/U.S. citizen student living and working in Canada.
Part 1 (this) will discuss the report generally and how the circumstances actually trigger the Canada/U.S. tax treaty. Think of it! A few thousand dollars of summer income received by a Canadian student implicates an international tax treaty. Only in America!
Interestingly, the specific factual circumstances include an example of what happens when a U.S. citizen living outside the United States receives a U.S. inheritance that generates U.S. source income. This is a concern for many Americans abroad. It is a complicated area.
Mostly Part 1 will discuss the “LITC” Report. Specifically how the “LITC” viewed the issue. How they incorrectly tried to apply the U.S. Canada tax treaty (apparently) without regard to the “saving clause” which is included in all U.S. tax treaties.
The report seems to say that the taxpayer filed a U.S. tax return for the 2021 tax year and filed to include income which (because of information reporting) the IRS was aware of. This should be of concern to Americans abroad generally. I will discuss this aspect more fully in Part 2.
Part 2 will discuss the specific problem of a U.S. citizen abroad inheriting (or anticipating inheriting) U.S. assets (whether income producing or not). I am making this a separate post because it is a complicated topic. The most rational response to this situation is highly dependent on your factual situation.
Some US taxpayers are beginning to receive letters from the IRS resulting from #FATCA bank account disclosures from foreign banks. The letters encourage compliance and have an educational tone. 👇 pic.twitter.com/PlMRd7aEA9
— John Richardson – Counsellor for US persons abroad (@ExpatriationLaw) February 23, 2026
In October I published a post about the U.K. division of Fidelity cleansing itself of U.S. citizen customers. Since the beginning, it has been clear that FATCA has made U.S. citizen customers a problems for non-U.S. banks. Today I was informed that FATCA reporting to the IRS has begun to find its way to U.S. citizens directly. As the above post from X.com indicates, some individual U.S. citizens are receiving communications from the IRS. The communication notes the existence of the “foreign financial asset” and that the asset should have been reported.
Significantly the letter notes the bank where the unreported account was located. In this case the bank was “Bank Hapoalim B.M” which is apparently one of Israel’s largest banks.
Interestingly on April 30, 2020 Bank Hapoalim admitted to helping U.S. citizen customers hide assets and avoid U.S. taxation. This resulted in a deferred prosecution agreement and a penalty. (The Department Of Justice Press Release is available online.) A reading of the press release strongly suggests that customers of this bank may be presumed to be guilty by association.
For those who want ONLY the “Readers Digest” version of this post …
Boston, USA based Fidelity has grown to be a global bemouth in the world of investment management for individuals. Their UK division (and perhaps others) will NOT do business with individuals even “suspected” to be US citizens.https://t.co/x0r50l50DH
— John Richardson – Counsellor for US persons abroad (@ExpatriationLaw) October 31, 2025
This is a long but important post. For some the post will be too long to read and digest. The post is about Fidelity. Those of a certain age will associate Fidelity with legendary fund manager Peter Lynch author of “One Up On Wall Street“.
There is an international trend of financial firms avoiding U.S. citizens. This post is specifically about Fidelity UK (1) refusing to accept U.S. citizens as clients and (2) proactively ridding their client base of those who they know are U.S. citizens or have reason to believe “may be” U.S. citizens!
I recently became aware of the following letter sent by Fidelity U.K. to certain undesirables …
This is Part 5 in a series of posts that I began writing in 2023. See the Appendix for links to all of the previous posts. The context of this series of posts is that FATCA IGAs require “foreign financial institutions” to provide the U.S. Social Security numbers of their U.S. citizen customers. This is a problem because:
1. The banks cannot provide to the IRS what they sometimes don’t have.
2. Many Americans abroad do NOT have a Social Security number to provide.
Note: The following brilliant essay was written by a former client of mine. I originally posted it in 2017 on Medium here. My introductory comments in 2017 are (I think) worth considering. If you want help with deciding whether to renounce U.S. citizenship feel free to reach out.
(Inspired by the television series, 13 Reasons Why)
Hey, it’s Jane. Jane Doe. Settle in because I’m about to tell you the story of my renunciation. More specifically, why I gave up my US citizenship. And if you’re reading this article, you’re probably thinking of doing it too. I can’t expect you to understand exactly how I feel; each person has a unique set of circumstances, a deeply personal mix of conflicting emotions, fears and problems that shape their response. But I can tell you why I did it. Let me start by saying, don’t believe everything you hear.
"From The OVDI Trauma Of 2011 To The Continuing Trauma Of U.S. Citizenship Abroad Today"
During the last week of August of 2011, many #Americansabroad were living in a state of terror. It's 14 years later. What has changed?https://t.co/M3Jhz3Sqnd
— John Richardson – Counsellor for US persons abroad (@ExpatriationLaw) August 26, 2025
Prologue – August 2011
Today is August 26, 2025. This coming weekend is Labour Day weekend. It was almost 14 years ago to the day that many U.S. citizens (and some former citizens) in Canada and around the world were being pressured to enter into the 2011 OVDI (“Offshore Voluntary Disclosure Initiative”). Those who entered that program, offered a substantial percentage of their wealth to the IRS, to avoid punishment. The punishment would have been for the failure to comploy with laws they had no way of knowing existed. Shockingly, many who entered the OVDI program agreed to penalties that were completely disproportionate to their noncompliance. Interestingly, many who (1) entered the program and (2) used the opt out provision paid little or no penalties.
The OVDI program was predicated on the generation of penalty threats from the IRS and the tax advisers delivering those threats to the individuals impacted. The nature of the threats evolved. Toward the deadline for entering OVDI the IRS offered increased penalty to nonresidents who didn’t know they were U.S. citizens. As noted by Robert Wood on August 11, 2011 writing in Forbes, the IRS agreed that individuals who didn’t know they were U.S. citizens would pay a reduced rate of 5% for the privilege of participating in the OVDI program. Mr. Wood describes this special concession to those who didn’t know they were U.S. citizens as follows:
You are invited to read the complete post on the Isaac Brock Society here.
The U.S. extra-territorial tax, form and penalty regime reminds Americans that they are:
“Subject to certain penalties, for uncertain conduct!
Those who do not file tax returns worry about the consequences of not filing.
Those who do file tax returns worry about the consequences of filing.
Thinking about the issue of trauma, I was reminded of a presentation that I did in 2015 in London, UK. It was titled:
Sacred Trust: Counselling Clients Through The Trauma Of “U.S. Citizenship Abroad” In A FATCAesque World”
(The audience was a group of U.S. tax professionals. I am not sure that they really understood the message. But, the presentation was a welcome diversion from the usual technical tax talk.)
I had forgotten about the presentation, but was reminded of it today. Looking at the slides, I think I agree with everything I said in 2015. If anything, it has gotten worse!
Generally, academics view citizenship taxation purely from the perspective of a U.S. tax return and a U.S. citizen living outside the United States. There is no consideration of how living as a tax resident of another country impacts U.S. tax filing.
Generally, U.S. citizens living outside the United States view citizenship taxation from the perspective of building a live outside the United States (that includes taxation) with the U.S. tax imposed on that life.
Commentators may be misreading the motivation for H.R.4501
It’s human nature to view and interpret the world based on our own experiences. Therefore, many Americans abroad (and their advocacy groups) interpreted the Hurd bill H.R.4501 as a sign that Congressman Hurd recognized the problems of citizenship taxation. This may not have been true. I now believe that H.R.4501 may have been an attempt to exempt one specific American citizen from U.S. taxation.
This is my third post commenting on Congressman Hurd’s H.R.4501. The first two posts are here and here:
Prior to Canada’s implementation of FATCA on July 1, 2014, the Canadian parliament held hearings. The hearings took place over two days in May of 2014. I appeared as a witness on Mary 14, 2014. Excerpts from the testimony appear in the above video. What follows is a transcript of my opening statement. I think I would say the same thing today.
The Chair (Mr. James Rajotte (Edmonton—Leduc, CPC)):
I call this meeting to order.
This is meeting number 35 of the Standing Committee on Finance. Our orders of the day, pursuant to the order of reference of Tuesday, April 8, 2014, are the study of Bill C-31, An Act to implement certain provisions of the budget tabled in Parliament on February 11, 2014 and other measures.
Colleagues, we have two panels before us this afternoon.
In the first panel, we’re very pleased to welcome Mr. John Richardson, and, from the Canadian Bankers Association, the acting vice-president, Mr. Darren Hannah. From the Canadian Council of Chief Executives, we have Mr. Brian Kingston, and from the Office of the Privacy Commissioner of Canada, we have Privacy Commissioner Madam Chantal Bernier.
Bienvenue. Each of you will have five minutes maximum for your opening statement.
We’ll begin with Mr. Richardson, please.
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Mr. John Richardson (As an Individual):
“Thanks very much for the chance to appear today.
I did take the time to watch yesterday’s session, which was actually enormously helpful to me, as I’m sure it was to you. I have a couple of thoughts, though, that are my own but directly link to that. The signing of the FATCA IGA can be seen as either good news or bad news.
First, interestingly, is the good news. It’s the point that Professor Cockfield made yesterday. In fact, what this does ensure is that Canada is absolutely 100% in compliance, no ifs, ands, or buts about it. That’s what it means to have signed that agreement.
Interestingly, the agreement specifically states that nothing happens until Canada makes it clear that it has done all of the legwork needed to actually implement the agreement, which I would assume to be all of the enabling legislation that we find in Bill C-31. Given that’s the case, as Professor Cockfield pointed out, there’s absolutely no reason to rush this whatsoever, absolutely none. This should not be in the dark recesses of an omnibus bill. It should in fact be brought to see the light of day in a separate bill.
The second aspect of this that’s very interesting in the IGA itself—and this question was asked yesterday—is who this applies to. It applies to U.S. persons and is defined in the agreement as “U.S. citizens or residents”. Now, what is extremely significant is that U.S. citizens are defined solely by the United States today, tomorrow, and forever. That means that someone who is a U.S. citizen today might not be a U.S. citizen tomorrow—and I’ll have more on this as we continue the discussion—but given that the U.S. has the right to define who a citizen is, given that I presume Canada would cede that right to them, I think it’s extremely important, absolutely essential, under any FATCA agreement that the definition of a U.S. citizen could never, never, never include any Canadian citizen who is a resident in Canada.
Third, we’ve got the whole problem of what FATCA actually means. Having watched a few of these committees, I see a lot of technical discussion of FATCA and a lot of discussion of regulations. In other words, there’s a lot of talk about how to implement this agreement, but precious little on what it actually means in terms of the lives of Canadians, and precious little in terms of what it means in terms of the country itself.
The simple fact of the matter is that FATCA, once implemented, will allow the U.S. to put a permanent capital tax on Canada every day of every year for as long as this agreement is in effect, simply by virtue of using U.S. citizens in Canada to tax and siphon revenue out of the country. It is a myth, an absolute myth, and it is completely wrong that under U.S. tax laws, U.S. citizens will not owe tax to the IRS. This is for two reasons. The first is that the U.S. tax code is hostile to anything foreign, and that would include anything in Canada in general, but secondly, anything that involves tax deferral, and it is plainly obvious that all of the pillars of Canadian retirement planning do in fact involve tax deferral.
So it is a myth that U.S. citizens would not owe tax. It is a myth. Interestingly, as I read in something yesterday, the opposite of truth is not the lie: the opposite is in fact the myth. This agreement will have severe consequences for Canada and Canadians.”
