Private Letter Rulings use on Excluding RRSP holdings

calgary-alberta · Post by **calgary-alberta** » Fri Jul 01, 2011 11:06 am

I am a Canadian citizen living in US. I have RRSP account and had non RRSP mutual fund account. I lost more than 50% of my non RRSP account. Over the years, I got less than $5 dividend (total) over the years. I did not report capital loss or the dividend in US tax return. So I should be in the OVDI program?

Thanks,

nelsona · Post by **nelsona** » Fri Jul 01, 2011 11:12 am

If you failed to report your non-RRSP income (yes, you had dividend income0 AND you failed to report FBAR on the non-RRSP, then, yes, you proabaly should do OVDI.

I would first, however, get my RRSP filings in order without OVDI, and I would correct my last 3 years return to include any undeclared dividend (may not even be taxable) and include any losses (since this will give you a refund).

I'm sorry, but I just don't understand folks moving to US, submitting a tax return and not questionning themselves on how to report their foreign income. Canada taxed you on world-wide income, why would anyone think US doesn't?

tsanaha · Post by **tsanaha** » Fri Jul 01, 2011 11:13 am

Tax is done on yearly base. You may lose your money over all these years (as you said 50%) but you are still liable for tax if there is a single year of gain (interest/div), and you may still be liable with all the penalty (FBAR, and tax due).

tsanaha · Post by **tsanaha** » Fri Jul 01, 2011 11:19 am

while in Canada, there was no other income (world wide), so there was no such an issue as reporting world wide income.

moving to US, the Canada left over became offshore -- and world wild income became an issue.

not meant to defend under report, for me, it was the non-resident withhold tax got into confused. after 2008 (even without knowing any OVDI and OVDP), all Canada bank income has been reported -- because no more withholding from Canada.

To get into OVDI is trying to make it right --- it is already like to plea guilty... what esle is needed ?

calgary-alberta · Post by **calgary-alberta** » Fri Jul 01, 2011 11:43 am

Thanks for all the advice. I wish I knew this website years ago when I moved to US. However, a publication from the IRS about reporting foreign interest is misleading, it says US citizens are required to report foreign income in the interest/dividend section. I assumed that I was not US citizen or PR so I did not need to report any of RRSP or non RRSP accounts. I should have done more research. I have already done RRSP back filing several weeks ago. I am going to attend OVDI to resolve the non RRSP issue.

tsanaha · Post by **tsanaha** » Fri Jul 01, 2011 11:51 am

just wonder how could you just have RRSP done without doing non-RRSP together?

i called IRS -- was told that non-RRSP and RRSP should be all in OVDI.

Now, the problem is that you filed 1040X with f8891/FBAR for your RRSP -- you certainly did not mention your non-RRSP (otherwise it would be called QD quiet disclosure). This will make your filing amending incomplete (or worse misleading) because you have left our your non-RRSP problem.

nelsona · Post by **nelsona** » Fri Jul 01, 2011 11:59 am

"just wonder how could you just have RRSP done without doing non-RRSP together? "

I wouldn't be casting any stones tsanaha.

nelsona · Post by **nelsona** » Fri Jul 01, 2011 12:00 pm

"i called IRS -- was told that non-RRSP and RRSP should be all in OVDI. "

Wow. There is a really reliable source. Yeah... right....

tsanaha · Post by **tsanaha** » Fri Jul 01, 2011 12:18 pm

1. where else could be the reliable source when dealing problem with IRS ?

2. logically and legally, when a taxpayer signs on f1040/f1040x, he/she must understand fully based on his/her knowledge and facts at that time. So while all the previous years were dong wrong, but it was the taxpayer's knowlledge/facts (that he knew/understood no matter how wrong it was),

now if he/she knows the problem all together (RRSP and non-RRSP), then to file f1040x knowing it was not fully complete and leaving non-RRSP out of the amending.

of course, there is a timing fact, he can just do it all the same time RRSP to outside OVDI and non-RRSP inside OVDI. How IRS will see this kind filing ?

Other fact is that OVDI covers from 2003 to 2010. If he only did RRSP for back 6 years, then OVDI still asks him to do from 2003 to 2010 -- that will leave earlier years open -- would the election made outside RRSP causes this problem because there is a gap say 2003/2004 ?

nelsona · Post by **nelsona** » Fri Jul 01, 2011 12:33 pm

The problem when calling IRS telephlunkies is that 3 calls will give you 3 answers, with possibly 1 -- maybe -- being correct.
We've all seen this.

calgary-alberta · Post by **calgary-alberta** » Fri Jul 01, 2011 2:11 pm

I filed 1040x for RRSP so I can meet the 2011 tax deadline. For non RRSP and other tax mistakes, I can actually get tax refund. I could not do RRSP and non RRSP together in 1040x as I did not have the non-RRSP tax documents. I contacted my Canadian broker for tax statements but they told me they could not found the previous year statement in their system. I was told no tax slip are sent for divident less than $50. Now they are trying to get statements from their headquarter. I need to get gatherer all tax document so I can submit a correct tax amendment for non RRSP. Also I do not think ovdi is for RRSP issue. I do not see any issue of separating the RRSP and non RRSP issue. Am I wrong about this?

tsanaha · Post by **tsanaha** » Fri Jul 01, 2011 2:18 pm

i think it should be okay -- at least your well intent to disclose all.

timing is not a big problem... but the gap... unless you did RRSP years all back to 2003 or the year you do on your OVDI.

otherwise, it will leave a gap between your outside RRSP and inside OVDI -- as in OVDI, you are required to file all these years of offshore. That is why I did not do my RRSP outside OVDI.

it is just my logical view... certainly not a pro view..

calgary-alberta · Post by **calgary-alberta** » Thu Jul 14, 2011 12:04 pm

tsanaha,

For OVDI, are bank statements required to submitted? I do not have old statements and bank told me they could not find my account history in their system either.

Thanks.

tsanaha · Post by **tsanaha** » Thu Jul 14, 2011 12:13 pm

calgary-alberta,

if your aggregated balance is less than 500K, they do not ask for statements to be submitted inside the package. However, you have to get them ready just in case they want to check.

You should ask your bank to provide a statement (I got TD bank statement as early as to 2004 because they only keep up to 7 years required by local law) to explain the fact.

calgary-alberta · Post by **calgary-alberta** » Thu Jul 14, 2011 12:36 pm

Thanks tsanaha. That is good news. My balance is very small so for me no need to provide statement. But I prefer to have as I need to back file FBAR forms. However, the bank told me they only found recent three year records. They requested from their headquarter, but the headquarter only sent me recent year statements. I am very frustrated with the bank.