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IRS Collects Tax for Foreign Countries Too?
Moving to the United States does not stop a foreign country from collecting a tax debt as Dr. Retfalvi found out (Retfalvi, 4thCircuit). Dr. Retfalvi was a Canadian citizen. He moved to the US under a Work Visa and later became a US Citizen. The IRS initiated collection procedures on Taxpayer on behalf of Canada. HUH? Yep!
Dr. Retfalvi sued the IRS in protest. He lost his case at the initial hearing and appealed. He lost at the Appellate Court level also. Appellate Court indicated that the IRS was authorized to collect Canadian Taxes on a US Citizen under the Collection Provision of the US-Canada Treaty. Moreover the IRS COULD use enforcement procedures to collect the amount due.
Moral: Expats Beware! If the tax treaty between the residence country and the tax owed country allows for collection, the IRS or Foreign Country will collect no matter where you reside. If you owe the tax, PAY THE TAX.