A group known as the Alliance for the Defense of Canadian Sovereignty has filed suit against the Canadian government challenging the constitutionality of an intergovernmental agreement between the U.S. and Canada to implement the Foreign Account Tax Compliance Act.

FATCA was included as part of the HIRE Act, which was passed by the U.S. Congress in 2010. The controversial law requires foreign financial institutions to report on the holdings of U.S. citizens to the Internal Revenue Service or else face withholding penalties of up to 30 percent on their income from U.S. sources.

To implement FATCA, the U.S. Treasury Department has been negotiating intergovernmental agreements with tax authorities in other countries, such as Canada, to expand existing tax treaties to allow for cross-border reporting. However, a number of dual citizens and expatriates have complained about the impact of the law, as many foreign banks have reacted by closing the bank accounts of U.S. citizens to avoid the complex reporting requirements. Record numbers of U.S.-born citizens abroad have been renouncing their U.S. citizenship in recent years as well, including 1,577 in the first half of this year, according to the Treasury Department’s latest figures.

The Alliance for the Defense of Canadian Sovereignty filed a lawsuit Monday in the Federal Court of Canada challenging the constitutionality of FATCA intergovernmental agreement on behalf of two U.S.-born plaintiffs who grew up in Canada and continue to live there. The ADCS said it hopes to stop the government of Canada from turning over private bank account information from more than 1 million United States “persons” and their families, living in Canada, to the IRS. The two plaintiffs, Virginia Hillis and Gwendolyn Louise Deegan, claim that the agreement between Canada and the U.S. to implement FATCA violates provisions of the Canadian Charter of Rights and Freedoms (including life, liberty and security of person; security against unreasonable search and seizure; and equal protection of law without discrimination) and the “principle that Canada will not forfeit its sovereignty to a foreign state.”

Both plaintiffs said they were born in the U.S., but left at the age of five to live in Canada, never obtaining a U.S. passport nor developing meaningful ties with the U.S. Nevertheless, they feel they are considered to be “tax cheats” by the U.S. simply because they are not “IRS compliant.”

“I am a proud Canadian,” Hillis said in a statement. “Why is my government branding me with being a potential U.S. tax evader merely because of my place of birth—and turning my personal information over to a foreign government’s jurisdiction?”

This lawsuit was accompanied by the separate submission on August 7 of a complaint to the United Nations, by concerned citizens worldwide, that the unique U.S. style “place of birth taxation,” for which FATCA is an enforcement tool, violates fundamental human rights.

“This was not the Canada our brave Fathers of Confederation envisioned,” said Deegan. “FATCA destroys our unity and we cannot permit the loss of our sovereignty.”

The Alliance for the Defence of Canadian Sovereignty has retained Joseph Arvay and David Gruber of the Vancouver law firm Farris LLP, with funding for the lawsuit coming from concerned donors. “Many of our donors are pensioners who have little savings, and we need the support of those who can afford larger donations to fund this case, expected to go to the Supreme Court of Canada” said ADCS chair Dr. Stephen Kish.