The Investment Dealers Association of Canada reports that the U.S. tax collector, the Internal Revenue Service, has adopted a new, simplified reporting regime for snowbirds dealing with RRSPs and RRIFs.

The new regime is designed to permit taxpayers to meet their reporting obligations by using information that is readily available.

A notice issued by the IRS last April subjected US citizens and residents to complex US filing requirements if they owned, contributed to, or made withdrawals from, RRSPs or RRIFs. On August 1, the IRS issued a new notice that provided some relief. Now, it has adopted a new, simplified regime.

The IRS notice says that, for taxable years beginning after December 31 2002, Forms 3520 and 3520A are no longer required to be filed. Specifically, the RRSP’s beneficiary is no longer required to file Form 3520 and the financial institution holding the RRSP trust is not required to file Form 3520A on the client beneficiary’s behalf, nor does the financial institution have to provide a beneficiary statement. Additionally, the previous, onerous penalties are no longer applicable.

The IRS is designing a new form that U.S. citizens or residents who hold a RRSP or RRIF will have to complete. The new form will also coordinate the reporting rules with the procedure for making the election under the U.S.-Canada income tax convention to defer U.S. income taxation of income accrued in the RRSP or RRIF. “However, until that form is completed, those affected must file information, as stipulated in the earlier IRS notice,” it says.

The Notice is available at: http://www.irs.gov/pub/irs-drop/n-03-75.pdf