IRS won't impose penalty on RRSP inside OVDI

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tsanaha
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Joined: Sun May 29, 2011 6:51 am

IRS won't impose penalty on RRSP inside OVDI

Post by tsanaha » Wed Jan 11, 2012 1:01 pm

Just an update,

IRS won't impose base penalty on RRSP inside OVDI. The past rumor about RRSP penalty is 100% rumor.

Again, Nelsona is so right about RRSP back filing.

calgary-alberta
Posts: 36
Joined: Fri Jun 03, 2011 4:38 pm

Post by calgary-alberta » Wed Jan 18, 2012 6:20 pm

Thanks tsanaha for the info. is this posted on IRS website? Could you provide the link?

tsanaha
Posts: 268
Joined: Sun May 29, 2011 6:51 am

Post by tsanaha » Wed Jan 18, 2012 6:49 pm

it is based on what i heard from an IRS agent (OVDI examiner).

Tacova
Posts: 6
Joined: Tue Feb 07, 2012 1:24 pm

Post by Tacova » Tue Feb 07, 2012 1:38 pm

:?: Hi Tsahana,

Just got back from OVDI examiner.

My case is very similar to yours.

Althought I never withdraw or added to my RRSP I am in for
the penalty(25%) and income taxe on distributions for the last 8 years.

That comes from higher authority in Washington.

That is not a rumor.

Not too happy :x

ikeaidea
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Joined: Wed Dec 29, 2010 7:11 pm

Post by ikeaidea » Wed Feb 08, 2012 12:49 pm

If you never withdraw, what distribution comes from?

Tacova
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Joined: Tue Feb 07, 2012 1:24 pm

Post by Tacova » Wed Feb 08, 2012 5:41 pm

I mean the income for the accounts: interest, dividends, realized capital gains.

ikeaidea
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Joined: Wed Dec 29, 2010 7:11 pm

Post by ikeaidea » Wed Feb 08, 2012 5:47 pm

You need argue. It's deferred and cannot impose penalty as long as you filed amended tax return with 8891.

tsanaha
Posts: 268
Joined: Sun May 29, 2011 6:51 am

Post by tsanaha » Wed Feb 08, 2012 6:22 pm

well, i was wrong, and i just spoke to my agent. last time when i spoke to him -- he told me "internally, we had discussed and decided not to impose penalty on RRSP".

But today, he told me RRSP would be included.

Now, we should contact TAS -- to get involved..

Tacova, have you signed form 906 yet ? Please do contact TAS, and even consider opt out.

Tacova
Posts: 6
Joined: Tue Feb 07, 2012 1:24 pm

Post by Tacova » Wed Feb 08, 2012 6:57 pm

No i have not signed anything yet. The examiner wants the RRSP statements to calculate additional tax on top of the 25% penalty. Those statements are all in french (the bank won't reemit english one). It is a mess.

I will contact TAS tomorrow.

Thanks for your advices

tsanaha
Posts: 268
Joined: Sun May 29, 2011 6:51 am

Post by tsanaha » Wed Feb 08, 2012 7:35 pm

Did you send f8891 which you made deferral tax election within your package ? They should at least let you back file f8891 -- based on relief 9100.

And did you ask for 9100 relief ? if so, they should at least respond you on their ruling -- granted or denied.

Tacova
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Joined: Tue Feb 07, 2012 1:24 pm

Post by Tacova » Wed Feb 08, 2012 8:12 pm

I have included f8891 with deferral tax election but no 9100 relief.

tsanaha
Posts: 268
Joined: Sun May 29, 2011 6:51 am

Post by tsanaha » Wed Feb 08, 2012 8:50 pm

9100 relief is a letter to request extension of making tax deferral election. so if IRS asks to include all the income from RRSP, that means they have denied your request --- at least they should send you a letter why they won't let you to request 9100 relief.

this maybe a good case for TAS to help.

Also you may consider to use FAQ 54.2 (I can not remember exact which FAQ) if you have never taken out/invested into RRSP after the fact you had become a US person -- I am assuming you were Canadian resident first then became US resident. In that case, your RRSP should be qualified for 5% penalty instead of 25%.

calgary-alberta
Posts: 36
Joined: Fri Jun 03, 2011 4:38 pm

Post by calgary-alberta » Thu Feb 09, 2012 1:17 am

tsanaha and Tacova, I have not heard anything from IRS regarding my ovdi. I submitted package and they received it. could you share your experience about the process?z do you assign an agent work on your case so you can call this person if you have questions?

tsanaha
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Joined: Sun May 29, 2011 6:51 am

Post by tsanaha » Thu Feb 09, 2012 5:32 am

yes, i have an agent working on my case, i think that is also true to Tacova

Tacova
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Joined: Tue Feb 07, 2012 1:24 pm

Post by Tacova » Thu Feb 09, 2012 11:49 am

Through my attorney I was contacted around end of October. The examiner
told us that cases with RRSP were to go to Washington regarding tax on income from these accounts. The examiner came back to me on Tuesday this week stating that I have to include those incomes. That's all I got from him for now. I am expecting a call today for some clarifications.

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