RRSP-asked to sign W-8BEN but can't now! I'm a PR of US

[Totalnewbie]

Part of my RRSP is held with HSBC Securities.

A few months ago, I got a letter from HSBC saying that the "IRS requires us to obtain documentation from all beneficial owners of accounts holding securities that pay US source income." I guess I signed a W-8BEN Certificate of Foreign Status of Beneficial Owner for US Tax Withholding a few years ago (when I was still living in Canada) and now that documentation is expiring so I have to sign another one.

The problem is that I recently became a Permanent resident of the US and I can't sign the W-8BEN now because I AM now a US resident. (Btw, I haven't notified HSBC of the status change so the letter wasn't sent because of that reason). So on the W-8BEN form it says to use Form W-9 if I am a US resident alien.

I read that the W-9 form doesn't actually get sent to the IRS but that the information on the W-9 and the payment made are usually reported on a Form 1096 or 1099 (from Wikipedia). http://en.wikipedia.org/wiki/W-9#W-9

My question: Does anybody have any idea what the IRS will say when they get this new info from HSBC? I didn't declare my RRSP to the IRS because I thought it was treated like 401k and tax-free. Am I going to get into some trouble now if the IRS finds out about my RRSP?

What if I just ignored HSBC and didn't sign their form? What would they do? I wonder if anyone has had this experience before. Thanks in advance!

[agnelson]

You need to submit a W-9.

For every year you file a 1040, you also need to file form 8891. you must go back and correct before IRS finds out you have RRSP, and all will be fine.

Go to forums.serbinski.com

I've covered this many times.

[Steven]

Well previously you were non-resident from the sounds of it, now you're resident so file Form 8891 with your 1040 and fill in the W-9. The IRS isn't likely to sweat the late filing of the 8891 (if in fact it is late, not clear from what you've said), it's such an obscure form. Formally file an adjustment if you're worried about it.

[agnelson]

If one has failed to file 8891 for any year that they filed 1040, they are liable for all the penalties that go with failure to file 3520, so best file. Besides, if ine does not file, it indicates that one has not availed themselves of the treaty, and are liable for year-over-year tax (and thus late payment penalties).

The typical period one goes back (may not apply here) is six years.

[john.jay]

I am a dual citizen and moved to the US in 1988 after working in canada for 25 years and accumulating several RRSP accounts. I never thought about mentioning them on my US tax forms since there was no income distributed. Now I have to start drawing out of them but a friend told me that the US considers them to be just normal savings accounts and I owe back taxes on the yearly earnings. Yikes anyone hear about this!

[agnelson]

Yikes is right. You had better get your 8891's done which will mean that you deferred tax until you withdraw. You need to go back 6 years.


I deal with this in detail at forums.serbinski.com

[Steven]

I had some BS with the IRS years ago about a retroactive tax treaty claim (which wasn't, they just can't read), the IRS absolutely hates it when you do and they specifically say in their publications they don't allow it. Well they can make exceptions but they usually only do if it doesn't involve any clawback by you, i.e. they would owe you money.

So if you've failed to file 8891s and you owe them money as a result, beg for mercy and they might allow it.

[agnelson]

Rev Proc 2002-23, which is the basis for 8891 set the precedent. It allowed for six year retroactive deferral (beyond that is out of IRS reach anyways).

All US citizens in canada who have forgotten to file 1040 do this regularly without issue.