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I spoke to Bill Yates of the IRS last week and he sent me the two
attached documents that describe the new simplified rules for
RRSP reporting. These documents replace notices 2003-25 and
2003-57. My reading of the documents is that the new reporting
requirements are now very similar to what was done previously.
There is a reference to a new form which does not seem to be
available yet, which would make it easier for everyone to report
on these accounts.
I would be interested to know your comments, perhaps you can post
them on your website.
IXXXXXXXX
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david ingram replies:
Bill Yates is an extremely pleasant person to deal with and I
agree with your assessment.
The panic is gone from the heavy duty reporting rules that were
put in force for 2001 and 2002 but only enforced during 2003 for
the 2002 year.
I have been waiting for the form to come out but your email is as
good a reason as any to bring up IRS NOTICE 2003-75 which
effectively changes the rules and brings up the information about
the non-existent form.
I think that the form will just parallel the form I devised
myself back in 1989 to deal with REV-PROC 89-45 which started the
whole thing. What is aimed for here is to make the provisions of
Article XVIII(7) of the US / CANADA Income Tax Convention take
precedence and logic prevail.
I think that we will see much better relations with the US under
Paul Martin as Prime Minister.
I am reproducing both of the relevant documents here because
Attachments are just too scary now for most people.
======================================
You can also find this in the August 2003 Newsletter at
www.centa.com
REV. PROC. 2002-23
SECTION 1. PURPOSE
This revenue procedure provides guidance for applying Article
XVIII(7)
of the United States-Canada Income Tax Convention, signed on
September 26,
1980, as amended by Protocols signed on June 14, 1983, March 28,
1984,
March 17, 1995, and July 29, 1997 (the "Convention"). It
supersedes
Revenue Procedure 89-45 (1989-2 C.B. 596), which provided
guidance for
applying former Article XXIX(5) of the Convention. Article
XVIII(7), which
was added to the Convention by the Protocol that was signed on
March 17,
1995, expanded and replaced Article XXIX(5).
SECTION 2. BACKGROUND
.01 DOMESTIC RULES. Under the domestic law of the United States,
an
individual who is a citizen or resident of the United States and
a
beneficiary of a Canadian retirement plan will be subject to
current
United States income taxation on income accrued in the plan even
though
the income is not currently distributed to the beneficiary,
unless the
plan is an employees' trust within the meaning of section 402(b)
of the
Internal Revenue Code and the individual is not a highly
compensated
employee subject to the rule of section 402(b)(4)(A). However, if
the plan
satisfies certain requirements under the domestic law of Canada,
the
income accrued in the plan will not be subject to Canadian income
taxation
until it is actually distributed from the plan (or from another
plan to
which it is transferred in a tax-free rollover). Thus, there may
be a
mismatch between the timing of the United States tax and the
Canadian tax,
with the result that the individual may be subject to double
taxation for
which no relief is available under Article XXIV of the
Convention.
.02 FORMER ARTICLE XXIX(5). Former Article XXIX(5) of the
Convention
addressed the timing mismatch in respect of a U.S. citizen who
was a
resident of Canada and a beneficiary of a Canadian registered
retirement
savings plan ("RRSP") by providing that such a U.S. citizen could
elect,
under rules established by the competent authority of the United
States,
to defer United States taxation with respect to any income
accrued in the
RRSP but not distributed by the RRSP, until such time as a
distribution
was made from such RRSP or any plan substituted therefore. The
rules for
making an election under former Article XXIX(5) were set forth in
Revenue
Procedure 89-45. Additional guidance was set forth in Revenue
Ruling 89-95
(1989-2 C.B. 131), which provided that if the proceeds of a RRSP
were
rolled over to a Canadian registered retirement income fund
("RRIF"), the
RRIF would be treated as a plan substituted for the RRSP, with
the result
that both the proceeds that were rolled over from the RRSP and
the income
subsequently accrued in the RRIF could qualify for deferral under
former
Article XXIX(5).
.03 ARTICLE XVIII(7). Article XVIII(7) of the Convention now
provides,
effective for taxable years beginning on or after January 1,
1996, that a
natural person who is a citizen or resident of either the United
States or
Canada and a beneficiary of a trust, company, organization, or
other
arrangement that is a resident of the other country that is
generally
exempt from income taxation in the other country (a "plan"), and
is
operated exclusively to provide pension, retirement, or employee
benefits,
may elect to defer taxation in the person's country of
citizenship or
residence, under rules established by the competent authority of
that
country, with respect to any income accrued in the plan but not
distributed by the plan, until such time as and to the extent
that a
distribution is made from the plan or any plan substituted
therefore.
SECTION 3. SCOPE
This revenue procedure applies to an individual who is a citizen
or
resident of the United States and a beneficiary of one of the
following
Canadian plans (an "eligible plan"): a RRSP, a RRIF, a registered
pension
plan, or a deferred profit sharing plan. This revenue procedure
applies
regardless of whether the individual was a resident of Canada at
the time
contributions were made to the eligible plan. For purposes of
this revenue
procedure, a "beneficiary" of an eligible plan is an individual
who would,
in the absence of an election under Article XVIII(7) of the
Convention, be
subject to current United States income taxation on income
accrued in the
plan. The revenue procedure applies only to income accrued in an
eligible
plan and not to any contributions to the plan.
SECTION 4. ELECTION PROCEDURES
.01 IN GENERAL. If income accruing in an eligible plan would
otherwise
be subject to current United States income taxation, a
beneficiary of the
eligible plan may elect for the beneficiary's taxable year (the
"current
year") and all subsequent years to defer United States income tax
on the
beneficiary's share of income accrued in the plan until that
income is
distributed to the beneficiary. Beneficiaries shall make the
election by
attaching to their timely filed (including extensions) United
States
federal income tax return for the current year, a statement that
includes
the following information:
(i) A statement that the taxpayer is claiming the benefit of
Article
XVIII(7) of the Convention under this revenue procedure;
(ii) The name of the trustee of the plan and the plan account
number,
if any; and
(iii) The balance in the plan at the beginning of the current
year.
.02 REPORTING. Beneficiaries shall attach a copy of the statement
required in paragraph 4.01 to their timely filed (including
extensions)
United States federal income tax return for each year subsequent
to the
current year, until the tax year in which a final distribution is
made
from the plan (or from any transferee plan within the meaning of
paragraph
4.03).
.03 ROLLOVERS. If an eligible plan for which an election has been
made
pursuant to paragraph 4.01 ("transferor plan") is rolled over to
another
eligible plan ("transferee plan") in a transfer that does not
result in
the current imposition of Canadian income tax (e.g., a transfer
such as
that described in Revenue Ruling 89-95), the previous election is
deemed
to carry over to the transferee plan.
.04 TRANSFEREE PLAN REPORTING. In the case of a transferee plan,
in
addition to a copy of the statement required for the transferor
plan under
paragraph 4.02, in the tax year of the transfer ("transfer
year"),
beneficiaries shall attach an additional statement that includes
the
following information:
(i) A statement that the taxpayer is claiming the benefit of
Article
XVIII(7) of the Convention under this revenue procedure;
(ii) The name of the trustee of the transferee plan and the plan
account number, if any;
(iii) The name of the trustee of the transferor plan and the plan
account number, if any;
(iv) The total amount of income accrued in the transferor plan on
which
United States income tax was deferred under either Article
XVIII(7) or
former Article XXIX(5); and
(v) The initial balance in the transferee plan. Beneficiaries of
a
transferee plan shall attach a copy of the statement required in
paragraph
4.02 (transferor plan) and a copy of the statement required in
this
paragraph 4.04 (transferee plan) to their timely filed (including
extensions) United States federal income tax return for each year
subsequent to the transfer year, until the tax year in which a
final
distribution is made from the transferee plan.
.05 MULTIPLE PLANS. An individual who is a beneficiary of more
than one
eligible plan must make a separate election and file a separate
statement
for each eligible plan.
.06 EXTENSION OF TIME FOR MAKING ELECTIONS. An extension of time
for
making an election under paragraph 4.01 may be available under
the
procedures applicable under sections 301.9100-1 and 301.9100-3 of
the
Procedure and Administration Regulations.
.07 PROSPECTIVE CHANGE OF ELECTION. An election once made cannot
be
revoked except with the consent of the Commissioner.
SECTION 5. DISTRIBUTIONS FROM AN ELIGIBLE PLAN
Distributions received by a beneficiary from an eligible plan
shall be
included in gross income by the beneficiary in the manner
provided under
section 72 of the Internal Revenue Code, subject to any other
applicable
provision of the Convention.
SECTION 6. EFFECT ON OTHER DOCUMENTS
This revenue procedure supersedes Revenue Procedure 89-45 (1989-2
C.B.
596).
SECTION 7. EFFECTIVE DATE
This revenue procedure is effective for taxable years ending on
or
after December 31, 2001. For taxable years ending before such
date and
beginning on or after January 1, 1996, taxpayers may elect to
apply either
this revenue procedure or Revenue Procedure 89-45.
SECTION 8. PAPERWORK REDUCTION ACT
The collection of information contained in this revenue procedure
has
been reviewed and approved by the Office of Management and Budget
in
accordance with the Paperwork Reduction Act (44 U.S.C. 3507)
under control
number 1545-1773.
An agency may not conduct or sponsor, and a person is not
required to
respond to, a collection of information unless the collection of
information displays a valid OMB control number.
The collection of information in this revenue procedure is in
section
4. This information is required to enable taxpayers to claim a
benefit
under the Convention. This information will be used to compute
and collect
the right amount of tax. The likely respondents are individuals.
The estimated total annual reporting burden is 10,000 hours. The
estimated annual burden per respondent varies from 0.1 hour to 1
hour,
depending on individual circumstances, with an estimated average
of 0.5.
The estimated number of respondents is 20,000.
The estimated annual frequency of responses is once per
respondent.
Books or records relating to a collection of information must be
retained as long as their contents may become material in the
administration of any internal revenue law. Generally, tax
returns and tax
return information are confidential, as required by 26 U.S.C.
6103.
DRAFTING INFORMATION
The principal authors of this revenue procedure are M. Grace
Fleeman
and Amanda A. Ehrlich of the Office of the Associate Chief
Counsel
(International). For further information regarding this revenue
procedure,
contact Amanda A. Ehrlich at (202) 622-3880 (not a toll-free
call).
===============================================================
The following is NOTICE 2003-75
Internal Revenue Bulletin: 2003-50
December 15, 2003
Notice 2003-75
RRSP and RRIF Information Reporting
-----------------------------------------------------------------
---------------
Table of Contents
a.. SECTION 1. BACKGROUND.
b.. SECTION 2. NEW REPORTING REGIME.
c.. SECTION 3. SECTIONS 6048 AND 6677 ARE NOT APPLICABLE
d.. SECTION 4. EFFECT ON OTHER DOCUMENTS.
e.. SECTION 5. EFFECTIVE DATE.
f.. SECTION 6. PAPERWORK REDUCTION ACT.
g.. SECTION 7. DRAFTING INFORMATION.
SECTION 1. BACKGROUND.
Notice 2003-25, 2003-18 I.R.B. 855, and Notice 2003-57, 2003-34
I.R.B. 397, provided guidance to taxpayers regarding their 2002
taxable year information reporting obligations with respect to
Canadian registered retirement savings plans (“RRSPs”) and
registered retirement income funds (“RRIFs”). These Notices
stated that Treasury and the IRS intended to develop an
alternative, simplified reporting regime for these Canadian
retirement plans for future taxable years.
This notice describes the new simplified reporting regime that
Treasury and the IRS have developed for taxpayers who hold
interests in RRSPs and RRIFs. The new reporting regime, which is
effective for taxable years beginning after December 31, 2002, is
in lieu of the filing obligations under section 6048 (Form 3520,
Annual Return to Report Transactions With Foreign Trusts and
Receipt of Certain Foreign Gifts, and Form 3520-A, Annual
Information Return of Foreign Trust With a U.S. Owner) that
otherwise apply to U.S. citizens and resident aliens who hold
interests in RRSPs and RRIFs and to the custodians of such plans.
The new simplified reporting regime is designed to permit
taxpayers to meet their reporting obligations by using
information that is readily available to them.
SECTION 2. NEW REPORTING REGIME.
.01. New Form. Under the authority of section 6001 of the
Internal Revenue Code, Treasury and the IRS are designing a new
form that a U.S. citizen or resident alien who holds an interest
in an RRSP or RRIF must complete and attach to his or her Form
1040. The new form also will coordinate the reporting rules with
the procedure set forth in section 4 of Revenue Procedure
2002-23, 2002-1 C.B. 744, for making the election under Article
XVIII(7) of the U.S.-Canada income tax convention to defer U.S.
income taxation of income accrued in the RRSP or RRIF.
.02. Interim Reporting Rules for Beneficiaries Making the
Election to Defer U.S. Income Taxation on Income of an RRSP or
RRIF. Until the form referred to in section 2.01 of this notice
is available, any U.S. citizen or resident alien who is a
beneficiary (as defined in section 2.06 of this notice) of an
RRSP or RRIF and who has made the election described in section 4
of Revenue Procedure 2002-23 with respect to the RRSP or RRIF, or
who is making such election effective for the 2003 taxable year
and subsequent taxable years, must
1.. attach a copy of each such election to his or her Form
1040;
2.. indicate the balance in each RRSP or RRIF at the end of the
taxable year either on the copy of the election or by attaching a
copy of a statement issued by the custodian of the RRSP or RRIF;
and
3.. comply with section 2.05 of this notice if he or she has
received any distributions during the taxable year from such RRSP
or RRIF.
.03. Interim Reporting Rules for Beneficiaries Not Making the
Election to Defer U.S. Income Taxation on Income of an RRSP or
RRIF. Until the form referred to in section 2.01 of this notice
is available, any U.S. citizen or resident alien who is a
beneficiary (as defined in section 2.06 of this notice) of an
RRSP or RRIF and who has not made the election described in
section 4 of Revenue Procedure 2002-23 with respect to the RRSP
or RRIF, and who is not making such election for the 2003 taxable
year, must attach a statement to his or her Form 1040 that
includes the following information:
1.. The caption “CANADIAN RRSP” or “CANADIAN RRIF,” whichever
is applicable;
2.. The taxpayer's name and taxpayer identification number;
3.. The taxpayer's address;
4.. The name and address of the custodian of the RRSP or RRIF
and the plan account number, if any;
5.. The amount of contributions to the RRSP or RRIF during the
taxable year;
6.. The undistributed earnings of the RRSP or RRIF during the
taxable year in each of the following categories: interest,
dividends, capital gains, and other;
7.. The total amount of distributions received from the RRSP or
RRIF during the taxable year; and
8.. The balance in the RRSP or RRIF at the end of the taxable
year.
The taxpayer must provide a separate statement for each RRSP or
RRIF of which he or she is a beneficiary. In addition to
attaching the statement described in this section 2.03 to his or
her Form 1040, the taxpayer must report the undistributed
earnings for that taxable year of all such RRSPs and RRIFs on
Schedule B (Interest and Ordinary Dividends) or D (Capital Gains
and Losses), as appropriate, and on line 8a, 9, 13, or 21 of the
Form 1040. The taxpayer must also comply with section 2.05 of
this notice if the taxpayer has received any distributions during
the taxable year from such RRSP or RRIF.
.04. Interim Reporting Rules for Annuitants of RRSPs and RRIFs.
Until the form referred to in section 2.01 of this notice is
available, if a U.S. citizen or resident alien is an annuitant
(as defined in section 2.06 of this notice) under an RRSP or RRIF
that has no beneficiary (as defined in section 2.06 of this
notice), and the annuitant receives a distribution from the RRSP
or RRIF, the annuitant must in the year of distribution attach a
statement to his or her Form 1040 that includes the following
information:
1.. The caption “ANNUITANT UNDER CANADIAN RRSP” or “ANNUITANT
UNDER CANADIAN RRIF,” whichever is applicable;
2.. The annuitant's name and taxpayer identification number;
3.. The annuitant's address;
4.. The name and address of the custodian of the RRSP or RRIF
and the plan account number, if any;
5.. The total amount of distributions received from the RRSP or
RRIF during the taxable year; and
6.. The balance in the RRSP or RRIF at the end of the taxable
year.
The annuitant must provide a separate statement for each such
RRSP or RRIF from which he or she has received a distribution
during the taxable year. The annuitant must comply with section
2.05 of this notice with respect to such distributions.
.05. Distributions. A U.S. citizen or resident alien who has
received any distributions during the taxable year from an RRSP
or RRIF must report the total amount of distributions received
during the taxable year from all such RRSPs and RRIFs on line 16a
of the Form 1040 and the taxable amount of all such distributions
(as determined under section 72) on line 16b of the Form 1040.
.06. Definition of Beneficiary and Annuitant. For purposes of the
new simplified reporting regime described in this notice, a
beneficiary of an RRSP or RRIF is an individual who is subject to
current U.S. income taxation on income accrued in the RRSP or
RRIF or would be subject to such taxation had the individual not
made the election under Article XVIII(7) of the U.S.-Canada
income tax convention to defer U.S. income taxation of income
accrued in the RRSP or RRIF. For these purposes, an annuitant of
an RRSP or RRIF is an individual who is designated pursuant to
the RRSP or RRIF as an annuitant.
.07. Record Retention. Taxpayers must retain supporting
documentation relating to information required by the new
reporting regime, including Canadian Forms T4RSP, T4RIF, or NR4,
and periodic or annual statements issued by the custodian of the
RRSP or RRIF.
SECTION 3. SECTIONS 6048 AND 6677 ARE NOT APPLICABLE
The new simplified reporting regime, instituted under the
authority of section 6001, provides the information needed for
tax compliance purposes. Therefore, pursuant to section
6048(d)(4), no reporting will be required under section 6048 with
respect to RRSPs and RRIFs that have beneficiaries or annuitants
who are subject to the new simplified reporting regime.
Accordingly, the associated penalties described in section 6677
do not apply to such RRSPs and RRIFs and their beneficiaries or
annuitants. A beneficiary or annuitant of an RRSP or RRIF may,
however, be subject to other penalties.
SECTION 4. EFFECT ON OTHER DOCUMENTS.
Notice 2003-25, Notice 2003-57, and section II.E of Notice 97-34
(pertaining to reporting for certain transfers to RRSPs), 1997-1
C.B. 422, are superseded to the extent inconsistent with this
notice.
SECTION 5. EFFECTIVE DATE.
This notice is effective for taxable years beginning after
December 31, 2002.
SECTION 6. PAPERWORK REDUCTION ACT.
The collection of information contained in this notice has been
reviewed and approved by the Office of Management and Budget in
accordance with the Paperwork Reduction Act (44 U.S.C. 3507)
under control number 1545-1865.
An agency may not conduct or sponsor, and a person is not
required to respond to, a collection of information unless the
collection of information displays a valid OMB control number.
The collection of information in this notice is in section 2.
This information will be used to compute and collect the right
amount of tax. The likely respondents are individuals.
The estimated total annual reporting burden under the new
simplified reporting regime for taxpayers who hold interests in
RRSPs and RRIFs is 1,500,000 hours. The estimated annual burden
per respondent varies from 0.5 hour to 5 hours, depending on
individual circumstances, with an estimated average of 2 hours.
The estimated number of respondents is 750,000.
The estimated annual frequency of responses is once per
respondent per plan.
The new simplified reporting regime substantially reduces the
reporting burden of taxpayers who hold interests in RRSPs and
RRIFs. Under the prior regime, the average estimated reporting
burden was more than 50 hours per Form 3520 (more than 100 hours
per respondent). In addition, the new simplified reporting regime
eliminates the requirement to file Form 3520-A, reducing the
burden of a custodian by more than 40 hours per RRSP or RRIF.
Books or records relating to a collection of information must be
retained as long as their contents may become material in the
administration of any internal revenue law. Generally, tax
returns and tax return information are confidential, as required
by 26 U.S.C. 6103.
SECTION 7. DRAFTING INFORMATION.
The principal author of this notice is Willard W. Yates of the
Office of Associate Chief Counsel (International). For further
information regarding this notice, contact Willard W. Yates at
(202) 622-3880 (not a toll-free call).
================================================
David Ingram's US/Canada Services
US / Canada / Mexico tax and working Visa Specialists
US / Canada Real Estate Specialists
4466 Prospect Road
North Vancouver, BC, CANADA, V7N 3L7
Res (604) 980-3578 Cell (604) 657-8451
(604) 980-0321
New email to [email protected]
www.centa.com www.david-ingram.com
Disclaimer: This question has been answered without detailed
information or consultation and is to be regarded only as general
comment. Nothing in this message is or should be construed as
advice in any particular circumstances. No contract exists
between the reader and the author and any and all non-contractual
duties are expressly denied. All readers should obtain formal
advice from a competent and appropriately qualified legal
practitioner or tax specialist in connection with personal or
business affairs such as at www.centa.com. If you forward this
message, this disclaimer must be included."
Be ALERT, the world needs more "lerts"
This from "ask an income tax and immigration expert" from
www.centa.com or www.jurock.com or www.featureweb.com. David
Ingram deals on a daily basis with expatriate tax returns with:
multi jurisdictional cross and trans border expatriate problems
for the United States, Canada, Mexico, Great Britain, the United
Kingdom, Kuwait, Dubai, Saudi Arabia, Thailand, Indonesia, Japan,
China, New Zealand, France, Germany, Spain, Italy, Russia,
Georgia, Brazil, Peru, Ecuador, Bolivia, Scotland, Ireland,
Hawaii, Florida, Montana, Morocco, Israel, Iraq, Iran, India,
Pakistan, Afghanistan, Mali, Bangkok, Greenland, Iceland, Cuba,
Bahamas, Bermuda, Barbados, St Vincent, Grenada,, Virgin Islands,
US, UK, GB, and any of the 43 states with state tax returns, etc.
Rockwall, Dallas, San Antonio and Houston Texas
Income Tax and Immigration Tips, Income Tax and Immigration
Wizard Income Tax and Immigration Guru Income Tax and Immigration
Consultant Income Tax and Immigration Specialist
Alaska, Alabama, Arkansas, Arizona,
California, Colorado, Connecticut,
Delaware, District of Columbia, Florida,
Garland, Georgia, Hawaii, Idaho, Illinois,
Indiana, Iowa, Kansas, Kentucky,
Louisiana, Maine, Maryland,
Massachusetts, Michigan, Minnesota,
Mississippi, Missouri, Montana, Nebraska,
Nevada, New Hampshire, New Jersey,
New Mexico,New York, North Carolina,
North Dakota, Ohio, Oklahoma, Oregon.
Pennsylvania, Rhode Island, Rockwall,
South Carolina, South Dakota, Tennessee,
Texas, Utah, Vermont, Virginia,
West Virginia, Wisconsin, Wyoming,
British Columbia, Alberta, Saskatchewan,
Manitoba, Ontario, Quebec City,
New Brunswick, Prince Edward Island,
Nova Scotia, Newfoundland, Yukon and
Northwest and Nunavit Territories,
Mount Vernon, Eumenclaw, Coos Bay
and Dallas Houston Rockwall Garland
Texas Taxman and Tax Guru and wizzard
wizard - consultant - expert - advisor -advisors consultants -
gurus - Paris Prague Moscow Berlin
Lima Rio de Janeiro, Santaigo
REV.PROC 2002-23 IRS NOTICE 2003-75
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