Beginning September 1st, the IRS will allow taxpayers relief who have unresolved issues related to certain retirement plans, such as a Canadian Registered Retirement Savings Plans.
If the United States has a tax treaty with the foreign country holding the retirement plan income deferral may be allowed under U.S. tax laws, provided the appropriate election is made on time. In many cases, the taxpayer is unaware of the option to elect income deferral. Under the IRS’ relief program, taxpayers may file the election retroactively with the delinquent tax returns and certain additional required information. Typically the taxpayer will address the past three years of tax returns and six years of delinquent Reports of Foreign Bank and Financial Accounts (FBARs). A taxpayer deemed to be a low compliance risk, such as one with a simple tax return and minimal amount of unpaid tax, will be subject to a lower threshold of review than a taxpayer with a higher compliance risk who may be subject to an audit which could extend beyond three years of returns. However, there is no protection from criminal prosecution under this program and a careful analysis is required.
Contact our office at our office to learn how this program may affect you.