FLORIDA USA resident Canadian Citizen withdrew RRSP at

Dear mr.Ingram,
I currently live and work in the US. In the fall of 1999 I accepted the
employment in Florida and moved from Canada to the US.
In the beginning of March I needed some funds to buy a car as it was
impossible to use one car for my husband and me as we did in Canada. In
addition, we needed some extra funds for our mortgage payments...Anyways , I
decided in the beginning of 2000 to take some money from my RRSP as it was
only available source for me...I did couple withdrawals and finally closed
the account,bank did withdraw the 10% tax before sending me the money...
Couple weeks ago I received a call from TD bank person where I had my RRSP
account. The person told me that I have to pay around 12,000 CN dollars
because I did not pay 25% on my withdrawals. In addition, this person told
me that the bank had to pay government this amount and now I have to return
it to the bank. Mind you, they always had my address and I never received
any related letters from the bank...After this conversation, in a week or so
I received a letter from the same person that I have to call him to arrange
the payment plan for the amount I mentioned above without any explanation on
where this number comes from or proof that they paid this amount to the
Canadian government.
Could you please help me to clear this issue as I have some concerns on who
is the person actually and the way how he handles the situation. If I need
to pay I'd like to make sure that it's legal and the issue is resolved
correctly.
Thanks for your time...
================================================
david ingram replies:
The bank is correct.  When you withdrew money from you r RRSP as a non-resident of Canada, the banmk was required to withhold 25% of the amount as Canadian non-resident withholding tax.
You owe the bank the difference. I assume that you took out $50,000 to $72,000 all together.
You also should have reported the withdrawal on your US return. The whole thing is not taxable but the earnings on the plan from the day you entered the US are taxable in the USA.  
And you should have  filled out US form TD F-90.22 to report your Canadian Accounts to the US Dept of Treasury.
Although unlikely to be enforced, I will bet that you are liable for penalties of up to $500,000 PLUS 5 years in jail.
Go to www.centa.comn and read the October 1995 newsletter for the rules on what you have to do.
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