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Niles A. Elber Comments in Tax Notes Article, Clarification on Retirement Plans Needed in OVDI

September 26, 2011, Tax Notes
By Marie Sapirie, Tax Notes

Excerpt taken from article.

In the world of voluntary disclosures, Canadian and other foreign retirement accounts could become the next passive foreign investment companies. Accounts known as registered retirement savings plans (RRSPs) in Canada and similar plans in other foreign jurisdictions are a source of consternation for U.S. taxpayers participating in the IRS's offshore voluntary disclosure initiative (OVDI) that ended September 9. Like PFICs in the previous offshore voluntary disclosure program, RRSPs could throw a wrench in the works unless the IRS issues guidance to simplify their treatment and that of similar foreign accounts. A way to deal with those accounts is need by taxpayers who have entered the OVDI. Perhaps the most promising option, from both an administrative and a diplomatic standpoint, is for the IRS to issue an extrastatutory work-around like that developed in September 2010 for PFICs.

The PFIC solution came after lawyers from Caplin & Drysdale and the American Bar Association Section of Taxation asked the IRS to provide relief to taxpayers who had made voluntary disclosures. Niles A. Elber, a partner at Caplin who helped spearhead the PFIC proposal, said PFICs threatened to create a roadblock in the offshore voluntary disclosure program. Click on the attached PDF to read more about RRSPs.

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