Retfalvi – U.S. 4th Circuit finds that Art. 26A of the Canada-U.S. Treaty was constitutionally valid

An individual (Retfalvi) who had resided for a while in Canada, left Canada, and became a U.S. citizen. When he failed to pay (or appeal to the Tax Court) a CRA reassessment of the gains on two Vancouver condos that he sold on his departure, CRA invoked Art. 26A of the Treaty. Retfalvi ultimately paid the liability (in U.S. dollars) to the IRS, but then launched a refund suit in the U.S. federal court system.

In rejecting Retfalvi’s argument that there had been a crucial failure to implement Art. 26A through House-originated implementing legislation, Judge Hollander stated:

Plainly put, the phrase “bills for raising Revenue” refers to bills that impose taxes for the general support of the federal government and not the administration of taxes. Article 26A does not levy taxes. …

We agree with the government that Article 26A merely facilitates collection of an already existing debt.

Neal Armstrong. Summary of Retfalvi v. USA, No. 18-2158 (U.S.C.A., 4^th Circuit, 16 July 2019) under Treaties – Income Tax Conventions - Art. 26A.