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I am a Permanent Resident from Canada. I moved to Texas in 1996 and I never filed any IRS documents (such as FBAR) informing them of my Canadian investments. I have about $33,000 in RRSP and $18,000 in LIRA and I want to transfer/cash out the RRSP to my Texas account. My income is very low this year, about $25,000.

What are the consequences of

  1. not having ever filed anything with IRS
  2. withdrawing $33,000 in one lump sum
  3. making several withdrawals over 3-4 months til the $33,000 is withdrawn?

What is the best way to do this: one lump sum or withdrawals under $10,000?

  • Just checking - are you a US citizen? Have you lived in the US since 1996? – DJClayworth Oct 15 '13 at 15:16
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not having ever filed anything with IRS

Up to $100,000 (one hundred thousand) penalty per account per year that you willfully neglected to report. If there's also tax evasion - it can jump up to much more + jail time.

withdrawing $33,000 in one lump sum

Not sure how RRSP are taxed. May very well be taxed as PFIC, since they're supposed to be taxed as mark to market unless you made an election (which you have not). You may end up owing in taxes more than you actually withdraw.

making several withdrawals over 3-4 months til the $33,000 is withdrawn?

Shouldn't make any difference.

What is the best way to do this: one lump sum or withdrawals under $10,000?

Oh, that will get you a ticket right to prison as it will be a strong evidence of intentional tax fraud. There's no statute on limitations on tax fraud, and there is jail time.


Get a GOOD tax ATTORNEY. You're past the CPA/EA time, since the communication with anyone but an attorney is not privileged in criminal prosecution. You will probably need to go to the OVDP, which will cost you some (quite a lot). DO NOT deal with OVDP without legal counsel.

Which is a pity, really, since there's a tax treaty with Canada and if you were not ignoring the filings, you would not need to pay any excessive tax at all.

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More complications...

When the provisions of FATCA go into effect for financial institutes in Canada (July, 2014?), the institution holding your RRSP and LIRA may, if they know or suspect that you are subject to US taxation, be required to supply the IRS with FBAR-type information on you and your accounts annually.

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