RESP Rev Proc 2020-17

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rafa02
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RESP Rev Proc 2020-17

Post by rafa02 »

As has been reported, in early March of 2020, the IRS released an advance version of Rev. Proc. 2020-17 to provide an exemption from the information reporting requirements under section 6048 for certain U.S. citizens and resident individuals with respect to their transactions with, and ownership of, certain tax-favored foreign trusts, and the U.S. Treasury Department and IRS intend to issue proposed regulations that would modify the information reporting requirements under section 6048.

My understanding was this initial announcement was to be followed in April with finalized regulations, but I have not seen anything from the IRS since the initial announcement. Has anyone seen followup from the IRS or Treasury?
nelsona
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Re: RESP Rev Proc 2020-17

Post by nelsona »

The rev Proc has been issued:

https://www.irs.gov/pub/irs-drop/rp-20-17.pdf
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rafa02
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Re: RESP Rev Proc 2020-17

Post by rafa02 »

Thanks nelsona, the linked document seems quite definitive, other than a section from page two:

The Department of the Treasury (Treasury Department) and the Internal Revenue Service (IRS) INTEND to issue proposed regulations that would modify the requirements under section 6048 to exclude eligible individuals’ transactions with, or ownership of, these applicable tax-favored foreign trusts from information reporting. The Treasury Department and the IRS request comments about these and other similar types of foreign trusts that should be considered for an exemption from section 6048 reporting.

I am curious if the INTENDED regulations were ever finalized.
nelsona
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Re: RESP Rev Proc 2020-17

Post by nelsona »

Doesn't really matter, that is part of the tax code which only gets changed periodically. The Rev Proc has the force of law, and is in effect at the date mentionned in the REv Proc, or the date of publication if not mentionned.
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rafa02
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Re: RESP Rev Proc 2020-17

Post by rafa02 »

Thanks for the explanation.
Kader99
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Re: RESP Rev Proc 2020-17

Post by Kader99 »

I read the RESP Rev Proc 2020-17 posted above by Nelson and I just want to make sure I understood it. Does it mean that no longer we have to file the form 8938 for the tax year 2020 ?
nelsona
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Re: RESP Rev Proc 2020-17

Post by nelsona »

It does not abslove you of other filing requiremnts, including 8938, PFIc and FBAR. It only applies to 3520.
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Lrod373
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Re: RESP Rev Proc 2020-17

Post by Lrod373 »

Do we still need to report the dividends/interest received within the RESP? .... I have been reporting those every year under the previous treatment of the RESPs as "trust" which they are not. But if the RESPs are now recognized like RRSPs are, then we wouldn't have to, right?
Any help in this matter would be appreciated.
nelsona
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Re: RESP Rev Proc 2020-17

Post by nelsona »

Yes. Only 3520 requirements were relaxed. Nothing else.
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Lrod373
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Re: RESP Rev Proc 2020-17

Post by Lrod373 »

Nelsona,
thanks for responding... we are not required to report any dividends or gains in RRSPs... wouldn't that be the same for RESPs... they are exactly the same except the purpose. Can you please expand on this?
nelsona
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Re: RESP Rev Proc 2020-17

Post by nelsona »

As I said, and the ruling pointed out, it only applied to the 3520 trust reporting, not to the internal income.

They are treated like RRSPs (your words, not those of the ruling) for the purpose of 3520 only . RESPs and TFSAs remain taxable year-over-year, and subject to PFIC reporting as well.
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Lrod373
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Re: RESP Rev Proc 2020-17

Post by Lrod373 »

You are right, I appreciate the comment.. at least they removed the need to file the 3520 forms which were beyond painful
They are still treated as Trusts... even when these are not really a trust, but who wants to pick a fight with the IRS.
nelsona
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Re: RESP Rev Proc 2020-17

Post by nelsona »

Whether or not they are treated as trusts, has little to do with reporting income. Unless a treaty of IRS reg allows anything to be tax-free or tax-deferred, yearly income needs to be reported, and in most foreign cases needs to be reported as exisiting . RRSPs, which are trusts, have that special treatment.
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