Tax Debt and Collections Cross-Border: Can the CRA or IRS Collect Across the Border?
Moving to the other country does not erase a tax debt. The Canada-US treaty includes a mutual collection assistance provision (Article XXVI A) that allows each country’s tax authority to ask the other to collect a “finally determined” tax debt on its behalf. This means the CRA can ask the IRS to collect a Canadian tax debt from a person now living in the US, and the IRS can ask the CRA to collect a US tax debt from a person now living in Canada. The provision has limits (the debt must be “finally determined,” meaning no more appeals are available), but it is real and enforceable.
Article XXVI A of the treaty provides for mutual assistance in the collection of taxes. A “finally determined” revenue claim (a tax debt where all appeal rights have been exhausted or expired) from one country can be enforced in the other country as if it were a tax debt of that other country. The assisting country uses its own domestic collection tools (liens, levies, garnishments). The provision does not apply to debts that are still under appeal, and it does not apply to debts that arose before the provision became effective (November 9, 1995 for amounts first assessed after that date). Moving across the border does not restart the statute of limitations on collection.
Can the CRA collect from me in the US?
Yes, if the Canadian tax debt is “finally determined.” The CRA can request that the IRS collect the debt using US domestic collection procedures. In practice, this means the IRS treats the Canadian debt similarly to a US tax debt: it can issue levies, file liens, and garnish wages.
- “Finally determined” means that the assessment is no longer subject to any rights of administrative review or appeal. If you have filed a notice of objection or are in Tax Court, the debt is not yet finally determined, and the mutual collection provision does not apply. Once all appeal avenues are exhausted or the time to appeal has expired, the CRA can invoke Article XXVI A.
- The CRA typically uses this provision for significant debts. Small balances are more likely to remain on the CRA’s books (accruing interest) until the person re-enters Canada or has Canadian-source income that can be offset. The costs of international collection make it impractical for small amounts.
Can the IRS collect from me in Canada?
Yes, under the same provision. The IRS can request that the CRA collect a US tax debt from a person living in Canada, provided the debt is finally determined. The CRA uses its own domestic collection powers (garnishments under ITA 224(1), liens, requirement to pay notices) to enforce the US claim.
- For US citizens who have moved to Canada and have unfiled US returns, the collection risk is real but layered. The IRS must first assess the tax (which requires either a filed return or a substitute-for-return assessment), then the assessment must become final. If the citizen has never filed, the statute of limitations on assessment does not begin to run (there is no statute of limitations for unfiled returns under IRC 6501(c)(3)). This means the IRS can assess the tax at any time, and once the assessment becomes final, invoke Article XXVI A.
- The Streamlined Filing Compliance Procedures are designed to address this situation: filing the delinquent returns and paying the tax before the IRS assesses it unilaterally, with no penalties under the streamlined program (for qualifying non-willful filers).
What about the statute of limitations?
Each country has its own statute of limitations on collection, and the timeframes differ.
- US: The IRS has 10 years from the date of assessment to collect a tax debt (IRC 6502). After 10 years, the debt expires and is no longer legally enforceable. However, certain actions can toll (pause) the statute: an installment agreement, a bankruptcy filing, an offer in compromise, or the taxpayer’s absence from the US (under certain circumstances).
- Canada: The CRA has 6 years from the date of the Notice of Assessment to take collection action for most debts, and 10 years for large debts assessed after March 3, 2004. The CRA can also restart the collection limitation period by obtaining a court judgment, which extends the period by 10 years.
- When the mutual collection provision is invoked, the assisting country enforces the claim, but the claim is subject to the originating country’s statute of limitations. If the CRA asks the IRS to collect a Canadian debt and the Canadian limitation period expires, the claim is no longer enforceable even though the IRS has not yet collected it.
What happens to my Canadian tax debt if I leave?
Your Canadian tax debt follows you. Interest continues to accrue at the CRA’s prescribed rate (compounded daily). Penalties continue to accrue if applicable. The CRA can also offset the debt against any Canadian refunds you are owed (including refunds on non-resident returns filed for Canadian-source income).
- If you have Canadian-source income after leaving (rental income, pension income, RRSP/RRIF withdrawals), the CRA can apply Part XIII withholding and redirect the tax withheld to the outstanding debt. This is administratively easier than invoking Article XXVI A and is the CRA’s first collection tool for non-residents with Canadian-source income.
- If you have no Canadian-source income and no Canadian assets, the CRA’s options narrow to Article XXVI A (requesting IRS assistance) or waiting until you return to Canada. In practice, the CRA is more likely to pursue Article XXVI A for larger debts (typically $25,000+) and let smaller debts sit until the person re-engages with the Canadian system.
What about bankruptcy across the border?
Bankruptcy in one country does not discharge a tax debt owed to the other country. A US bankruptcy filing (Chapter 7 or 13) can discharge certain US tax debts (taxes assessed more than 3 years ago, returns filed more than 2 years ago, and assessments more than 240 days old, under IRC 523(a)(1)), but it has no effect on Canadian tax debts. The CRA can continue to collect a Canadian debt from a person who has gone through US bankruptcy.
- Similarly, a Canadian bankruptcy (under the Bankruptcy and Insolvency Act) can discharge certain Canadian tax debts, but it does not affect US tax debts. The IRS can continue to collect a US debt from a person who has gone through Canadian bankruptcy.
- For cross-border individuals with tax debts in both countries, bankruptcy planning requires separate analysis under each country’s laws, and the discharge in one country does not create a discharge in the other.
What should I do next?
If you have an outstanding tax debt in one country and live in the other, the first step is determining whether the debt is “finally determined” (which triggers the mutual collection provision) or still under appeal (which delays enforcement). If you have unfiled returns, filing them voluntarily (through streamlined or VDP) is almost always better than waiting for an involuntary assessment.
- CRA Voluntary Disclosure Program, the Canadian program for coming forward
- Streamlined Filing Compliance Procedures, the US program for non-willful delinquent filers
- Cross-border tax return cost, what to expect for the filing
- Form 1116 and the foreign tax credit, the credit that may reduce the debt
- US-Canada tax treaty explained, the treaty framework including the mutual collection article
The Cross-Border Assessment is a fixed $250. You get a written, CPA-reviewed analysis of your exposure, the collection risks, and the best resolution path in both countries.
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Yarik Yarosh, CPA. "Tax Debt and Collections Cross-Border: Can the CRA or IRS Collect Across the Border?." Blue Cloud CPA, August 30, 2026. https://bluecloudcpa.com/guides/tax-debt-collections-cross-border-canada-us
This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.