PLR 201002030: Canadian RRSP election deadline extended by 60 days

Plain-English summary

The IRS granted a Canadian taxpayer who became a U.S. resident and later a U.S. citizen an extension of time to elect tax treatment under Rev. Proc. 89-45 and Rev. Proc. 2002-23 for Canadian Registered Retirement Savings Plans. The taxpayer and spouse had not learned that the elections and related Form 8891 filings were required until an accountant prepared a later return. The IRS found that the taxpayer satisfied the reasonable-cause and good-faith standards and granted 60 days from the ruling letter to make the elections. The ruling did not determine whether the taxpayer was otherwise eligible to make them.

Ruling snapshot

• Question: May the taxpayer receive more time to make the applicable RRSP elections under the cited revenue procedures?
• Outcome: Approved
• Key authorities: Treas. Reg. §§ 301.9100-1 and 301.9100-3; Rev. Proc. 89-45; Rev. Proc. 2002-23

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 201002030
Third Party Communication: None
Release Date: 1/15/2010
Date of Communication: Not Applicable
Index Number: 9100.22-00, 9114.03-06
Person To Contact:
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Telephone Number:
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Refer Reply To:
CC:INTL
PLR-136640-09
Date:
September 28, 2009

A = -----------------------
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Tax Years = --------------

Year 1 = ---------

Dear ---------------:

This is in reply to a letter dated August 4, 2009, requesting an extension of time under Treas. Reg. § 301.9100-3 for A to elect the provisions of Rev. Proc. 89-45, 1989-2 596, and Rev. Proc. 2002-23, 2002-1 C.B. 744, for Tax Years. The information submitted for consideration is substantially as set forth below.

The ruling contained in this letter is predicated upon facts and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party. This office has not verified any of the material submitted in support of the request for a ruling. Verification of the factual information, representations, and other data may be required as a part of the audit process.

A is a Canadian citizen who became a U.S. resident in Year 1 and later became a U.S. citizen during Tax Years. A and his wife file a joint income tax return. A established two Canadian Registered Retirement Savings Plans (RRSPs) prior to becoming a U.S. resident. A and his wife did not learn about and their accountants did not advise them of the need to make an election to defer taxation of income accruing in A’s RRSPs or to file Forms 8891 for A’s RRSPs until their accountants started to prepare their returns for 2008.
PLR-136640-09
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A states that the Internal Revenue Service has not contacted him regarding his RRSPs.

Treas. Reg. § 301.9100-1(c) provides that the Commissioner has discretion to grant a taxpayer a reasonable extension of time, under the rules set forth in Treas. Reg. § 301.9100-3, to make a regulatory election under all subtitles of the Internal Revenue Code, except subtitles E, G, H, and I.

Treas. Reg. § 301.9100 -1(b) provides that an election includes an application for relief in respect of tax, and defines a regulatory election as an election whose due date is prescribed by a regulation, a revenue ruling, revenue procedure, notice, or announcement.

Treas. Reg. § 301.9100-3(a) provides that requests for relief subject to this section will be granted when the taxpayer provides the evidence (including affidavits described in Treas. Reg. § 301.9100-3(e)) to establish to the satisfaction of the Commissioner that the taxpayer acted reasonably and in good faith, and the grant of relief will not prejudice the interests of the Government.

In the present situation, the election provided in Rev. Proc. 89-45 and Rev. Proc. 2002- 23 is a regulatory election within the meaning of Treas. Reg. § 301.9100-1(b). Therefore, the Commissioner has discretionary authority under Treas. Reg. § 301.9100–1(c) to grant A an extension of time, provided that A satisfies the standards set forth in Treas. Reg. § 301.9100-3(a).

Based on the facts and circumstances of this case, we conclude that A satisfies the standards of Treas. Reg. § 301.9100-3. Accordingly, A is granted an extension of time until 60 days from the date of this ruling letter to elect the provisions of Rev. Proc. 89-45 and Rev. Proc. 2002-23, as applicable, for Tax Years.

Pursuant to section 4.07 of Rev. Proc. 2002-23, the election once made cannot be revoked except with the consent of the Commissioner. For 2004 and all subsequent tax years until the tax year in which a final distribution is made from the RRSP, A must file a Form 8891 for each RRSP for which the election is made.

As provided in Treas. Reg. § 301.9100-1(a), the granting of an extension of time is not a determination that A is otherwise eligible to make the above-described election.

No ruling has been requested, and none is expressed, as to the application of any other section of the Code or regulations to the facts presented.

A copy of this ruling letter should be associated with A’s and his wife’s amended tax returns for Tax Years.
PLR-136640-09
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This ruling is directed only to the taxpayer who has requested it. I.R.C. § 6110(k)(3) provides that it may not be used or cited as precedent.

Sincerely,

___
M. Grace Fleeman
Senior Technical Reviewer
CC:INTL:Br1

Enclosure:-