Snowbirds may become an extinct species, at least within the borders of the United States. Few outsiders know this but Canadians live in igloos year round. Snowbirds are Canadians who seek warmer climate, especially during their retirement years. They have been a significant boon to the real estate markets in Southern states, especially Florida, but one should not forget places like my Dad’s trailer park in San Benito where numerous Winter Texans can play year-round golf and outdoor tennis. Mostly, they spend their enormous retirement wealth that it took many years working in Canada to earn. Expect the snowbirds to start flying further south, to places like Cayman Islands, Mexico, or Costa Rica, anywhere outside the reach of the IRS taxman.
It is no exaggeration to say that United States border guards now have had tax enforcement added to their list of duties. A few months back at the Expat Forum, Omater wrote a little anectdote (now apparently censored), still unverified:
I just got back from my local CGA who is doing our business tax return. He bought a house in the US at about the same time I did. I told him about my trip next week and he advised that I take copies of my last 6 tax returns, which I had already decided to do.
He said that last October a good friend of his who is a dual citizen as well as a CPA and CGA was headed to the US to visit family. They scanned his passport and told him that he could not board his plane for failure to file tax returns. The thing about this guy is that he had always filed his returns in a timely manner, every year since he had landed in Canada. He had to get his office staff to find 6 years of tax returns and fax them to wherever he was at the airport. By the time that happened he had missed his plane.
This is the only verifiable account I have heard of somebody being refused entrance to a plane headed for the states.
Numerous commenters considered the above story to be an urban myth. But Omater now offers a couple more stories of Canadians–not US citizens–who are planning to sell their US condos as a result of the recent crackdown and the hassles that they are receiving from border guards (emphasis mine):
The stories I am hearing first hand are not about United States Citizens, but about Canadians. I had taken a water aerobic class and was sitting in the hot tub afterwords when one woman talking to another woman got louder and louder about being stopped at the border on the way to Palm Springs and were told that they had to file a US tax return. She was very angry and said they would give the place away before they filed a tax return to the IRS when it was none of their business, taxes or no taxes.
A few weeks ago I took my dog to the vet and she asked where in the south I was from. She then told me she had done her residency in Memphis, my home town. I asked her if she had used a green card and she said no and, “Thank God”. She started telling me about her uncle who had a place in Arizona where he and his wife spent 6 months per year, mostly because of his allergies. This year they were headed down and were stopped at the border and told that they had been flagged as being required to file a tax return on their worldly income. When her uncle told them they never spend more than the 6 month allotted time, they were told that they could visit 6 months but would have to file a tax return based on a formula that would basically only allow them a few months per year otherwise. I once read that it worked out to around 120 days. (I am sure you know what I am talking about here.) However, the formula that these people were told about only allowed them a few months per year over a three-year period. Everybody is pretty livid that they will be required to pay tax and to expect no benefit in return. I asked the vet how the IRS knew about her uncle and she didn’t know.
People are talking about selling as soon as the economy allows them to. We just bought a place last April, before I heard of FATCA and FBAR and thankfully we bought cheap. I hate it but we will have to sell. We had hoped to have 6 months a year in our little villa for retirement. I am not sure what we will do now, but it will not be in the states. I can tell you, we spent a lot of money down there. It will be a loss to a depressed little community whose people are always grateful for our business.
I talked to several Real Estate brokers and agents there and I wonder why they are not flying off the handle about this! If they think things are bad now, just wait until the last Canadian leaves Florida, California and Arizona!
Thanks for all you do!
The words, “they had been flagged” provides further proof that this is a systematic usage of border guards to enforce taxes. I would like to track down when the border guards started doing the IRS’ dirty work. Which POTUS approved this crack down? Was it Obama, Bush, or did it start earlier than these two?