Category Archives: assistance in collection

Canadian citizenship: When citizenship in one country affords rights of access to another country

Part I – Citizenship in the 21st century

In the 20th century few people thought much about citizenship. Few people thought about the value of multiple citizenships.

In the 21st century people think about citizenships. People are beginning to see the value of having more than one citizenship. They are also (because of the awareness (caused by FATCA) of U.S. citizenship taxation) beginning to see the value of NOT being a U.S. citizen. (Interestingly U.S. Senator Ron Wyden is claiming that dual citizenship provides enhanced opportunities for tax evasion.)

When people renounce U.S. citizenship they will experience the following changes:

1. For U.S. immigration purposes they cease to be U.S. citizens and are treated by the United States like all other citizens of their country of citizenship; and

2. For U.S. tax purposes they cease to be “U.S. Persons” and become “nonresident aliens”. (This loss of U.S. citizenship may or may not be a benefit depending on their individual circumstances). The definitions of “U.S. Person” and “nonresident alien” are found in “26 U.S. Code § 7701 – Definitions“.

When citizenship may afford enhanced rights of access to other countries

Those with more than one citizenship will remember situations where citizenship in one country provided benefits that citizenship in another country did not. Sometimes the benefits are mundane (citizens of one country paying less for an entry visa than citizens of another country). Sometimes citizenship is a condition for various kinds of “enhanced entry programs” (think the U.S. Global Entry programs that include NEXUS.) Sometimes the benefits are more substantive (visa free access for citizens of country A and no visa free access for citizens of country B). Sometimes citizenship in one country gives the right to live in other countries (think citizenship in EU countries). Sometimes citizenship in one country gives the right to seek specific employment in other countries (think Canada-US-Mexico TN visas.) Sometimes there are tax advantages (the France U.S. tax treaty affords interesting tax benefits for U.S. citizens living in France). Sometimes citizenship can protect a person from extradition requests (civil law countries are reluctant to allow their citizens to be extradited). Sometimes citizenship can protect a person from tax enforcement claims from another country (the U.S./Canada tax treaty affords certain protections to individuals based on citizenship status). Sometimes citizenship can protect a person from certain kinds of taxation (Canada’s “Underused Housing Tax” and the BC “Speculation and Vacancy Tax” are recent examples). The point is that citizenship may (and often does) afford benefits that extend beyond the right to live and work in a country. When considering whether to seek various citizenships or renounce various citizenships it is important to think beyond the basic right to live in a country.

Conclusion: ANY change in your citizenship (whether renouncing U.S. citizenship or acquiring an additional citizenship) should consider the issues raised above!!

Part II – What about Canadian citizenship? What do Canadians give up by renouncing U.S. citizenship? What are the reasons (there are many) why Permanent Residents of Canada should naturalize as Canadian citizens?

Because of generous and easy access to the United States, Canadian citizens who renounce U.S. citizenship give up far less than citizens of many other countries. Furthermore, becoming a Canadian citizen affords many privileges vis-a-vis the United States and Canada.

Rather than list the reasons individually I am pleased (with his kind permission) to refer you to a recent post by Los Angeles based immigration lawyer Parviz Malakouti-Fitzgerald, Esq. The post – Six Benefits of Canadian Citizenship for Access to the U.S. Market – is referenced in the following tweet.

The post has its origins in a recent twitter exchange and begins as follows:

Does being a Canadian citizen offer unique benefits of access to the United States market?

This is more-or-less the question I read on twitter from U.S. citizenship renunciation expert John Richardson last week on the last day of 2023.

“Question on @Quora: Is the only real advantage in being a Canadian in accessing the US market, six months visa free stays & a limited range of professions on the TN visa list which also does not lead do a Green Card? No special concessions or fast track ..”

The author provides an excellent, well researched summary. It not only demonstrates why Canadians give up less by renouncing U.S. citizenship but also why Canadian citizenship is valuable to have.

I encourage you to read the complete post here …

https://www.malakoutilaw.com/six-benefits-of-canadian-citizenship-for-access-to-the-u-s-market

John Richardson – Follow me on Twitter @Expatriationlaw

The 2019 IRS "expatriation" compliance campaign: Getting ahead of the fear mongering

On July 19, 2019 the IRS announced six new compliance initiatives.
Of particular interest to U.S. citizens and permanent residents (Green Card holders) is what is described as:

Expatriation
U.S. citizens and long-term residents (lawful permanent residents in eight out of the last 15 taxable years) who expatriated on or after June 17, 2008, may not have met their filing requirements or tax obligations. The Internal Revenue Service will address noncompliance through a variety of treatment streams, including outreach, soft letters, and examination.

What is expatriation?
Continue reading

The common law "revenue rule": From whence it came to where it's going

Introduction – What is the Revenue Rule?


The “Revenue Rule” can be overridden by statute of by treaty. The United States is attempting to override the “Revenue Rule” through changes to tax treaties. Because the United States imposes worldwide taxation on the residents of other countries, the United States would be advantaged overriding the “Revenue Rule”.
Putting the “Revenue Rule” in historical context. Does the Revenue Rule still matter?
Continue reading

How can the IRS enforce US tax debts in foreign countries? Does renunciation of citizenship matter?

For years people have asked the question: Can the United States enforce U.S. tax debts in foreign countries? If this is possible, how would this work. I sometimes answer questions on Quora. My answer to this question (comments invited) is here:
Read John Richardson's answer to Can the IRS confiscate non US-based assets for taxes owed after someone renounces their citizenship? on Quora

How the "assistance in collection" provisions in the Canada US Tax Treaty facilitates "US citizenship based taxation"


The above tweet references the comment I left on an article titled: ”

Why is the IRS Collecting Taxes for Denmark?

which appeared at the “Procedurally Speaking” blog.
The article is about the “assistance in collection” provision which is found in 5 U.S. Tax Treaties (which include: Canada, Denmark, Sweden, France and the Netherlands). I am particularly interested in this because of a recent post at the Isaac Brock Society.
This post discusses the “assistance in collection” provision found in Article XXVI A of the Canada U.S. Tax Treaty. The full test of this article is:
Continue reading