PLR 1314019: IRS grants extra time for a Canadian RRSP election

Plain-English summary

The IRS granted a U.S. resident 60 days to make an election under Rev. Proc. 2002-23 for a Canadian registered retirement savings plan. The taxpayer became a U.S. resident after establishing the RRSP, and her preparers did not advise her about the election needed to defer U.S. tax on RRSP income. She acted promptly after learning of the reporting requirement, and the IRS found that she met the reasonable-cause and government-interest standards under Treas. Reg. § 301.9100-3. The ruling requires amended returns with Form 8891 and does not determine whether the taxpayer otherwise qualifies for the election.

Ruling snapshot

• Question: Can the taxpayer receive more time to make the Rev. Proc. 2002-23 election for a Canadian RRSP?
• Outcome: Approved, with a 60-day extension and specified amended-return requirements.
• Key authorities: Treas. Reg. §§ 301.9100-1 and 301.9100-3; Rev. Proc. 2002-23

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201314019 [Third Party Communication:
Release Date: 4/5/2013 Date of Communication: Month DD, YYYY]
Index Number: 9100.22-00, 9114.03-06
Person To Contact:
----------------------------- ---------------------, ID No. ------------------
-------------------------------------- Telephone Number:
-------------------------------------------------- ----------------------
Refer Reply To:
CC:INTL:BR1
PLR-135993-12
Date:
January 02, 2013

              TY:---------------

Legend

Taxpayer = -----------------------------

Year 1 = -------

Year 2 = -------

Year 3 = -------

Date = ----------------------------

RRSP = ---------------------

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

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

This is in reply to a letter dated August 17, 2012, and supplemented by letters dated
September 14, 2012, October 2, 2012, and November 5, 2012, requesting an extension
of time under Treas. Reg. § 301.9100-3 for Taxpayer to elect the provisions of Rev.
Proc. 2002-23, 2002-1 C.B. 7444, for Tax Years.

The rulings contained in this letter are based upon information and representations
submitted by the taxpayer and accompanied by a penalty of perjury statement executed
by an appropriate party. While this office has not verified any of the material submitted
in support of the request for rulings, it is subject to verification on examination.
PLR-135993-12 2

FACTS:

Taxpayer, a Canadian citizen, established RRSP in Year 1. Taxpayer became a U.S.
resident in Year 2. Her tax returns for Tax Years were timely filed. However, her tax
return preparers did not advise her of the need to make an election under Article
XVIII(7) of the Treaty to defer U.S. tax on income earned in RRSP. Upon learning of
the reporting requirement for RRSP in Year 3, Taxpayer took immediate steps to
request an extension of time to make an election and to comply with her information
reporting requirements. There have been no distributions from RRSP. Taxpayer has
not been contacted by the IRS regarding RRSP.

RULING REQUESTED

Whether Taxpayer may receive an extension of time under Treas. Reg. § 301.9100-3 to
elect the provisions of Rev. Proc. 2002-23, 2002-1 C.B. 744, for Tax Years.

LAW AND ANALYSIS

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. 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
Taxpayers an extension of time, provided that Taxpayers satisfy the standards set forth
in Treas. Reg. § 301.9100-3(a).

Based solely on the information submitted and representations made, we conclude that
Taxpayer satisfies the standards of Treas. Reg. § 301.9100-3. Accordingly, Taxpayer is
granted an extension of time until 60 days from the date of this ruling letter to make an
election for Tax Years under Rev. Proc. 2002-23. As provided in Treas. Reg.
PLR-135993-12 3

§ 301.9100-1(a), the granting of an extension of time is not a determination that
Taxpayers are otherwise eligible to make the above-described election.

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 Tax Years, Taxpayer must
file amended U.S. income tax returns to which she attaches a Form 8891 (U.S.
Information Return for Beneficiaries of Certain Canadian Registered Retirement Plans)
for RRSP. For each subsequent tax year through the tax year in which the final
distribution is made from RRSP, Taxpayer must attach a Form 8891 to her U.S. income
tax return.

A copy of this letter must be attached to any income tax return to which it is relevant.
Alternatively, taxpayers filing their returns electronically may satisfy this requirement by
attaching a statement to their return that provides the date and control number of the
letter ruling.

Except as expressly provided herein, no opinion is expressed or implied concerning the
tax consequences of any aspect of any transaction or item discussed or referenced in
this letter.

This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) of the Code
provides that it may not be used or cited as precedent.

In accordance with the Power of Attorney on file with this office, a copy of this letter is
being sent to your authorized representative.

                                   Sincerely,



                                   Quyen Huynh
                                   Senior Counsel; CC:INTL:Br1
                                   (International)

Enclosure (1)
Copy for §6110 purposes

cc: