>Specifically, the IRS notice applies to taxpayers or custodians of these plans who are required to file Form 3520 – Annual Return to Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts or Form 3520-A – Annual Information Return of Foreign Trust With a US Owner. In laymen’s terms, the guidance applies to registered retirement savings plans (RRSPs), registered retirement income funds (RRIFs), or other eligible plans and individuals, according to Washington-based legal publisher BNA.
>The relief applies to the 2002 tax year and allows eligible taxpayers or plans to not file the applicable forms if they meet all the requirements of a three-pronged test:
- make or have made an election to defer US income tax on the beneficiary’s share of income accrued in the plan until that income is distributed to the beneficiary
- comply or have complied with reporting requirements under Revenue Procedure 2002-23
- have received no distributions from the plan during the taxable year.
>IRS said if those eligible that file Forms 3520 or 3520-A do not include all appropriate information, it would ask for the needed information. The individuals or plans only would be subject to failure to file penalties if they did not respond to IRS requests for information.
The notice will be in the August 25 Internal Revenue Bulletin 2003-34.