My personal experience, as I also work for Canadian clients on a regular basis -now I may be mistaken
I think Form 1099 only exists in the US, no other country has those.
Second, if you're living in the US, you only file a return with the American IRS no matter where the income came from, as the $$$ went to a US party.
The Canadian tax office doesn't know us, we're not on their books!
My two (American) cents
[Edited at 2005-08-11 20:43]
[Edited at 2005-08-11 21:20]