Does anyone know any good tax lawyers who are well versed in the issue of Canadian and US tax laws? I have a Canadian friend whose husband is an "accidental American" (born in the US but has never lived or worked there). He believed he'd renounced his citizenship in 1982 as the rules at that time were that applying for other citizenship (Canadian) renounced US citizenship. He's now being told he's still an American citizen and may be subject to penalties as high as $10,000 per year per account because he wasn't declaring every single account he has (because he didn't think he was an American of course). They can also ban him from entry into the US because he doesn't have a US passport (only a Canadian one) which affects his ability to run his company. The whole thing sounded a bit far fetched until I read stories like this: "The attack on accidental Americans" (http://mises.org/daily/5666) and this "Expats call for FATCA repeal" (http://www.forbes.com/sites/robertwood/2011/09/06/expats-call-for-fatca-repeal/). Anyone have any experience or knowledge surrounding this? What should they do now?
He believes he renounced his citizenship but US govt does not acknowledge that how fucked up is that? I guess he is lying cuz if he renounced it then he should have the paperwork
If he is lying, then how come articles confirm that many others are in the same boat? The main issue is that many countries are taxed on income in the country and the US (I believe) is taxed on income wherever it is earned. The US desperately needs money (as do all governments these days) and so has a new policy. Another issue is that he and his family went back to Germany, when his dad (German citizen) completed his masters degree. They later moved to Canada and became citizens in the 80s. Until the 90s, the US refused to grant dual citizenship. He would not have been able to claim his US citizenship if he tried to, because of the policies in place then. He never applied for or worked, or lived (except as a baby) or anything in the US. He is an accidental citizen and never even thought that he might be forced to pay penalties. He owes no taxes of course. His business has clients in the US but his Canadian business taxes are all paid up. My personal opinion is that this whole thing will be adjudicated to be ultra vires, but to try and take the IRS to court will be a long tough process. His sister in the same boat just plans not to travel to the US. (So the policy backfires - there is no money to collect and now tourism will suffer.) If true, it is a truly bizarre case! Does anyone know of others in this leaky boat?
This penalty could be the FBAR filing requirement: http://www.irs.gov/businesses/small/article/0,,id=148849,00.html Hope that helps provide some more info.