WHEN Barack Obama vowed in 2009 to pursue tax cheats abroad, he probably was not thinking of people like Ginny Hillis. Born in Detroit to Canadian parents, the retired lawyer has lived in Canada since she was six. Like many transplanted Americans, she ignored an American law that since 1913 has obliged citizens to file tax returns regardless of where they live.

With the Foreign Account Tax Compliance Act (FATCA), enacted in 2010, that became harder. It demanded that foreign banks report to the Internal Revenue Service (IRS) details of accounts held by Americans abroad. Banks that fail to comply are subject to a 30% tax on payments they receive from the United States. Some 7m Americans outside the country (1m of them in Canada), along with an unknown number of “US persons”, are now caught in FATCA’s net.

Unlike most, Ms Hillis is fighting back through the courts. She and Gwen Deegan, an artist who has lived in Canada since she was five, filed a suit claiming that the Canadian government’s co-operation with FATCA violates a tax treaty and constitutional protections against discrimination. In September a judge denied the first claim. The second, that Canada is discriminating against citizens on the basis of their place of birth, may rest on stronger arguments.

Among the reluctant dual-taxpayers are Americans who dodged the draft during the Vietnam war, academics who went north in 1950-70 and border babies, born in the United States because that is where the nearest hospital was. Half a million “snowbirds”, pensioners who winter in the American South, risk liability for tax. Their biggest gripe: proceeds from the sale of a family home, untaxed in Canada, could be subject to capital-gains tax in the United States. A record 4,279 Americans worldwide renounced their United States citizenship last year.

If Ms Hillis and Ms Deegan win in court, Canada’s government will face an awkward choice between complying with the decision and exposing Canadian banks to huge penalties. The Alliance for the Defence of Canadian Sovereignty, which is paying the women’s legal expenses, has harvested donations from China, Vatican City and beyond. If FATCA falls Ms Hillis would still owe American tax. The real problem is the extraterritorial demands of the IRS.