The First Steps
If you heard that the IRS might want YOU: Take your time, SLOW DOWN, read this, because it all depends on who YOU are.
1) Do NOT make any hasty decisions. You are likely to be in a high emotional state upon discovery that the U.S. IRS might want you. You are NOT (at this moment) capable of making a reasoned and rational decision. The decision you make will almost certainly have significant and long-lasting consequences to you and to your family’s financial and emotional security. This will be a life-altering decision. Seek the proper kind of advice, and then spend time to consider, and then seek more advice.
The first question is whether you are a ‘U.S. person’ or not.
2) You MUST first determine whether you are a ‘U.S person’ which would include a ‘U.S. citizen’. At the moment, you have a ‘citizenship problem’ and NOT a ‘tax problem’ It is obvious that if you are NOT a U.S. citizen or person you should NOT (except in very specific circumstances) be filing any tax returns to the IRS. The U.S. citizenship laws are vague and confusing. You first need to determine your citizenship status. Do NOT seek advice on your citizenship status:
- directly from the U.S. government including U.S. border guards (although they are well intentioned they have been known to provide incomplete or other misleading information), U.S. Consulate, etc.
- from a tax consultant/professional, bank, or financial adviser
These individuals are NOT experts in citizenship law and in some cases have a financial conflict of interest.
Furthermore, a determination of your citizenship status can be determined only by understanding a combination of the law of citizenship at different times (for example the year that you became a Canadian citizen) and the facts that pertain to your specific situation.
3) At the risk of oversimplification, you might consider the following two situations:
Those born or naturalized in the U.S. are U.S. citizens, unless they have performed a ‘relinquishing act’, that resulted in the loss of U.S. citizenship, in accordance with clearly stated U.S. law.
Those born outside the U.S. are not U.S. citizens without the establishment of additional objective facts. (These additional objective facts are based on information about your parentage.)
Green Card Holders:
Those holding a ‘Green Card’ are considered to be ‘taxable U.S. persons’ until there has been a termination of the Green Card in accordance with specific provisions of U.S. law.
The above are only the first important steps. ONLY if you are satisfied that you are a ‘U.S. person’ should you consider, as one of many possible options, approaching a tax professional.