Should I have received a 1099-DIV for a LIRA?

[Tomleder]

Hi,

Need some help. Getting mixed information from a variety of sources.

My wife and I live in the US. She left behind a LIRA when she left Canada in 2006. I have been filing 8891 forms every year for this account up until they became obsolete for 2014.

For 2013 to present, she has received 1099-DIV from them for a couple thousand each year. My understanding was that I was deferring this income until distribution, so have not been reporting the 1099-DIV. Never have they withheld taxes.

At the end of 2014, the IRS sent me a notice asking why my return did not agree with information from other sources, listing 2 1099-DIVs, one of which was US based (and included on my return) and the one for the LIRA that was not reported.

I asked a "tax specialist" about this and his feeling was that a tax deferred investment should not result in a 1099-DIV if no distribution is made. That was my opinion. The Canadian investment firm, when called to request a corrected document, did not agree and said I had to figure out how to report it.

I tried getting an opinion from the IRS, but gave up after being transferred 4 times "to the right department" and waiting 2 hours on hold. The advice I did get was "read the instructions for form 1099-DIV to find out how to report it" and " please wait while I transfer you"

So, should I push back on the investment firm to correct the reporting - what arguments can I use besides "I don't think I should have received this" and "I never got one before you started administering this plan"? Incidentally, this all started when CITIGroup took the account over and they told me I won't get one next year when administration goes back to AGF.... Odd.

Or, how do I report it and not make it taxable (of course, I am still under the belief that it is not.)

Thanks for any help resolving this and helping me avoid repeating this mistake on my 2015 return.

Tom

[nelsona]

Merely state in a letter that this income is internal income to your RRSP, and the account is not liable for internal tax per Article XVIII(7) of the tax treaty, and previously made elections under REv proc 2002-23 reported in several Form 8891's and that no withdrawal as taken place.

Was US tax withheld from your RRSP?

[Tomleder]

Thanks for the reply. No tax was withheld.

Should I enter these 1099-DIV on my return or just send a letter clarifying why I did not?

Tom

[nelsona]

Why on earth would you enter these amounts (and pay tax) on your return. To do this would end tax deferral on your RRSP!