The IRS has simplified the procedures for electing U.S. tax deferral for Canadian Registered Retirement Plans (RRSPs and RRIFs) by eliminating the requirement for U.S. taxpayers to file Form 8891. Other U.S. reporting requirements that may apply under the Bank Secrecy Act and Code Section 6038D are not modified by this action.
The old procedures required taxpayers to elect deferral treatment similar to participants in U.S. individual retirement accounts and 401(k) plans by attaching Form 8891 to their U.S. return and choosing the tax treaty benefit. The form also required the taxpayer to report detail about each RRSP and RRIF. Taxpayers who failed to attach this form had to request a private letter ruling to retroactively obtain the treaty benefit.
Under the new procedure (Rev. Proc. 2014-55), taxpayers will automatically qualify for tax deferral as long as they filed and continued to file U.S. returns for any year they held an interested in an RRSP or RRIF and included any distributions as income in their U.S. return. Form 8891 is eliminated. Any taxpayer who failed to properly choose the deferral benefit in the past has now been provided retroactive relief by the IRS under this procedure.
The IRS has simplified the procedures for electing U.S. tax deferral for Canadian Registered Retirement Plans by eliminating the requirement for U.S. taxpayers to file Form 8891.
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