The following is an update to my blog of 2012-01-31
Over the past few years, I've had more and more U.S.-citizen clients tell me that when they enter the United States with a Canadian passport, they are being hassled by the border guards.
A Canadian passport generally lists an individual's place of birth, so the officials can identify U.S. citizenship this way (at least for those born in the United States).
Technically, it is illegal to enter the United States without a valid passport. There are a couple of other acceptable U.S. documents, but a Canadian passport is not one of them:
Some people have been told that in the short term, they will not be able to enter the U.S. this way, so they will need to get U.S. passports.
The concern is that these individuals may not have been filing U.S. tax returns. This is about to be a bigger problem.
Since 1986, any person who applied for a U.S. passport or 'Green Card' (allowing him or her to permanently live and work in the United States) has been required to provide information that would be transferred to the IRS. The objective was to have the IRS chase these people for tax returns if they had not filed.
Regulations were proposed in 1992, but not finalized. A revised set was proposed in January 2012. The IRS has now finalized the regulations to replace these. The applicant will have to provide:
- Name (and previous name, if there was one);
- Permanent and mailing addresses;
- U.S. tax identification number – usually a Social Security Number;
- Date of birth.
Applicants who fail to provide the above information will face a $500 penalty. The U.S. Citizen Immigration Service is then expected to pass this information to the IRS. An applicant who has not filed returns can expect communication from the IRS.
If you haven't been filing U.S. returns, this is yet one more reason to become compliant. Conveniently, the IRS just made it easier to get into the system.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.