Under the new agreement, Canadian banks must tell the United States if any Americans aren't filing their returns.
The U.S. believes their citizenship has value, said Steven Flynn, a tax lawyer from Vancouver, B.C. And he means that literally.
"The United States is probably the only major country in the world that will tax its citizens on their worldwide income," Flynn told CTVNews.ca. "It catches a lot of people."
Will banks be sending my information to the IRS?
That depends on whether you’re a U.S. citizen or not, and don't be quick to assume you aren't.
According to the U.S. Citizenship and Immigration Services, a person who has an American parent automatically becomes a U.S. citizen at birth no matter where they are born, said Greg Boos, U.S. immigration attorney in Bellingham, Wash. This has left some Canadians unaware that they're dual citizens, he said.
But if you discover you are an American and the banks find out, your information will be sent to the CRA, and the IRS may give you a call next year.
If Americans fail to report their income to the IRS, Flynn said that they could face penaltiesranging from $1,000 to $100,000 per violation.
They can then make an appointment to renounce at a U.S. consulate, but the appointment wouldn’t be for another six months, he said.
In response to this increase, the U.S. Department of State's renunciation fee increased by five times from $450 to $2,350 last year, Boos said.
"So many people are coming into the United States to renounce their U.S. citizenship that they now have to make some money off of it because they're dedicating a lot of resources to it," he said.
But there is another option.
Those wishing to relinquishing their U.S. citizenship must prove they have committed an "expatriating act," Boos said, which includes accepting a foreign (in this case, Canadian) government job, joining the Canadian Armed Forces or becoming a naturalized citizen of Canada. This last act means a person is over 18 years old and has lived in Canada as a permanent resident for at least 1,460 days during the last six years, according toCitizenship and Immigration Canada.
Are there other issues dual citizens should be aware of?
The issue of what it means to be a U.S.-Canadian or dual citizenship has been in the headlines across Canada recently with theapproval of Bill C-24 last month.
Under the law, Canadians who have -- or are eligible for -- citizenship in another country can have their Canadian citizenship stripped if they are convicted of certain crimes including fraud to obtain citizenship and terrorism offences.
A number of human rights and immigration groups came out against the bill, includingAmnesty International that said the bill violated Canada's charter.
So what should I do now?
Before walking into a consulate and getting rid of their U.S. citizenship, both Boos and Flynn recommend dual citizens meet with a U.S. tax consultant.
Each situation is different, and a consultant will be able to explain whether the IRS will be looking for your tax return in 2016.
"It can be a very scary thing," Flynn said. "But FATCA is forcing people to realize that they don’t have to be a U.S. citizen anymore."