IRS Simplifies Procedures for Electing Tax Deferral on Canadian Retirement Plan Accrued Income

The IRS recently issued Revenue Procedure 2014-55, which simplifies the reporting obligation and method to obtain the deferral of U.S. taxation on interests held by U.S. taxpayers in Canadian Registered Retirement Savings Plans (?Ç£RRSPs?Ç¥) and Registered Retirement Income Funds (?Ç£RRIFs?Ç¥). Previously, to defer U.S. taxation on income accruing in their RRSPs and RRIFs to the date of distribution, U.S. taxpayers were required to file Form 8891 with the IRS, which many taxpayers failed to do. The IRS has eliminated Form 8891, as well as the requirement that taxpayers file this form for future and most prior tax years. U.S. taxpayers may generally qualify for favorable tax treatment under the Revenue Procedure so long as they continue to file U.S. tax returns for any year in which they hold an interest in a RRSP or RRIF and include any distributions as income on their U.S. tax returns. A copy of the Revenue Procedure can be found here.