Worried there is a mistake in 8891. Now what?

[TooMuchCoffee]

I think that when my accountant helped me “catch upâ€￾ on US taxes a few years ago, she didn’t complete the 8891 correctly. Specifically, for the first 8891 where I elected to defer taxes, she didn't include a separate form for each RRSP. Instead, she just put the all the names of the institutions in the same form (and there are no account numbers listed).

I've tried to learn more since that first time I filed, and now I think this could be an issue. So now what? Should I try to correct that first 8891? I notice that there is a thread that says backfiling 8891s is no longer possible. I do not think this is backfilling because I have already filed, but I need to correct them. Is this right?

Note that I don’t owe any US taxes, and I did not on any of the previous years that I filed.

Also, that my RRSP is a group plan that includes mutual funds. Does that make a difference? I had thought the 8891 form was the right one, but now I'm second guessing everything.

[Taxpoor]

TooMuchCoffee,

My understanding is that you have more than one RRSP? or do you have one RRSP with a mixed portfolio?

If you have more than one RRSP with separate account numbers, then you must fill out a separate 8891 form for each RRSP.

If you have one RRSP with a portforlio containing different mutual funds, then you list only that RRSP with the portfolio account number.

My suggestion is that you call the IRS and explain the situation. You might be hesitant to do this, but trust me it is the right thing to do and you will resolve this issue and feel a hell of a lot better for doing it. He/she will probably get you to file a 1040X with the additional 8891(s) for the years in question. (Be sure to write down the IRS agents identification number...they tell you it when they first answer the phone).

Also, I don't see why you would need a PLR (private letter ruling) as you are filing an amended return, not an initial 8891.

Following this, you should get your Accountant to write up a letter tabulating why she decided to put you in this situation! Not sure where some of these accountants come from! I am still shopping around to do my final 2012 tax, but will probably go with Serbinski.

Again, don't sweat this as it is an easy problem to solve as you basically told them the information, just not in corret format.

A friend of mine was sent an 85k penalty, and after an hour on the phone with the IRS he is now getting back 2k!

It pays to call.

[TooMuchCoffee]

Thanks for the response, Taxpoor. I have RRSPs at different institutions, so there really should have been more than one 8891.

I am sure my accountant did this because she did not realize it was incorrect. She does not specialize in cross border accounting, and just offers it as an extra service. It seems obvious to me now (it says right on the form that you're supposed to file a separate form for each account!) but I was completely bewildered by it all when I first filed, and I thought handing it over to an accountant was the right thing to do.

I will try calling the IRS next week. I also have to do something about the accountant. She mentioned that she is helping quite a few people "catch up" on their US filing. If she's filling in all those 8891 forms incorrectly, she's creating problems for a whole bunch of people.

[nelsona]

Toomuch,

The problem is, that now is too late to quietly back-file all these 8891's. Last december (2102) was the end of just back-filing 8891 and making the election, and without trhe election, you DO owe IRS tax, since your RRSP gains were not sheltered ... by theelection.

Unfortunately, the only solution, if the IRS (correctly) rejects these back-filed 8891's, is to ask for a PLR from IRS, which is quite expensive.

btw, never have or pay an accounatnt to do something that they are not familiar with or does not specialize in.

The instructions for 8891 are so simple, and clear, that it is unforgivable for an acountant to not be able to read.

[nelsona]

at this point though, I would wait for a response from IRS. Never fix something until you hear it is broke.. or at least until IRS has had full time to digest what you originally sent them.

[TooMuchCoffee]

Nelsona - I did make the election. I did not do it properly.

Do you mean I should try amending the original 8891 and seeing if they accept it? (them, actually)

Or wait to see if they say anything about that first 8891, which I now know was wrong?

Could be that I made it all worse in when I filed last year - I did the 8891s myself, and I did them properly, with a separate form for each RRSP. The problem is, they refer back to a single 8891 in which I made the original election, and that one was filled in incorrectly.

[nelsona]

Read the instructions for 8891. You can no longer back-file the election, properly or improperly, without WRITTEN permission for IRS.

So, technically, sending all those 8891's, correct or incorrect was not allowed, if you made an election on any of them, except the one for 2012, whre you would have stated that 2012 was the first year you elected -- which is not your case.

So, now, wait for IRS. No point sending in amendment of soemthing they have not looked at.

[nelsona]

Unless... and I may be misinterpreting, that you sent these elections years ago (information would be usefull in telling exactly which year...0.

Then, if IRS didn't say anything about lumping all your RSPPs on one sheet, I would forget about that, and make sure that you continue to file one per RRSP.

Remeber that you also have FBAR and, sicne 2011 FATCA issue to dea lwith...

[TooMuchCoffee]

I sent in the forms two years ago, and I sent 3 in order to "catch up." The 8891 in which I requested the election was attached to the earliest return.

I have never heard anything back from the IRS.

I'm pretty sure that I have sent in all the required FBARs, and that they're correct.

Thank you for your responses.

[Taxpoor]

I would take Nelsona's advice and just file correct amount of 8891's going forward.

Now that there is some mis-trust with your accountant..you might want to check on your FBARs and make sure they are tabulated correctly. I do my own for that very reason.

With the FBAR you can always send in a revision.

[TooMuchCoffee]

Although I will not use that accountant again, I have sent her an email with my concerns. As previously mentioned, I know she has done US returns for other Canadians. If she is going to keep doing them, she should be aware of this issue.

I'm still confident the FBARs are correct. I had all of that information going back years and years, and all the accountant did was calculate the exchange and transfer the info to the FBAR form. Since it seemed simple enough, I did it myself last year (online).

Thank you again.

[nelsona]

so just FATCA

[Taxpoor]

Just to be the devils advocate. Your accountant should not be doing your US taxes unless they have an EIN or a PTIN #.

Also...as you pointed out, the FBAR is a simple form (its complexity lies in the tabulation)...but the 8891 is a super simple form, assuming you are deferring. I would make sure as well that at the very least she marked you down as the 'beneficiary' and not the 'annuitant'.

[TooMuchCoffee]

One suggestion I received if I want to correct the 8891: use the streamlined program. Although I have already filed returns, the program says:

"Amended returns submitted through this program will be treated as high risk returns and subject to examination, [b]except for those filed for the sole purpose of submitting late-filed Forms 8891[/b] to seek relief for failure to timely elect deferral of income from certain retirement or savings plans where deferral is permitted by relevant treaty."

Isn't that what I would be doing?


(also: I checked. Yes, I am marked as the beneficiary. I don't know if about the PTIN and will ask)

[nelsona]

You said you have already filed your 8891's in a previous year. They are fine, and back then late filing was OK. You have already done the quiet approach and it has worked. Move on.
If they had had a hard spot about multiple RRSPs on the same form they would have come back to you. They did not.