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Form 5471 Filing – Information Return of U.S. Persons With Respect to Certain Foreign Corporations

Form 5471 Filing – Information Return of U.S. Persons With Respect to Certain Foreign Corporations

Form 5471 Filing – Information Return of U.S. Persons With Respect to Certain Foreign Corporations

U.S. citizens and U.S. residents who are officers, directors, or shareholders in certain foreign corporations are responsible for Form 5471 filing

Form 5471 Filing

Form 5471 is in an information return that must be filed by U.S. citizens and U.S. residents who are officers, directors, or shareholders in certain foreign corporations.

Form 5471 Filing Requirements

Form 5471 is required to be filed in the following situations:

  • U.S. person becomes a director or officer of a foreign corporation
  • U.S. person acquires an ownership interest in a foreign corporation in excess of the prescribed limits
  • U.S. person disposes of stock in a foreign corporation that reduces his or her interest in the foreign corporation to less than the prescribed limits
  • U.S. person is in control of a foreign corporation for an uninterrupted period of at least 30 days in a year
  • U.S. person is a 10% or more shareholder in a foreign corporation that is a “controlled foreign corporation” for an uninterrupted period of at least 30 days in a year and that person owns that stock on the last day of the year.

Ownership interests are determined by a complex set of rules of direct, indirect, and constructive ownership. The category of filers can make calculation of ownership interests confusing, The categories are used to determine which schedules, statements and/or other information must be included as part of the Form 5471 filing.

Internal Revenue Code sections 6038 and 6046 determine the reporting requirements. Substantial penalties exist for U.S. citizens and U.S. residents who are liable for filing Form 5471 and who failed to do so.

Form 5471 Filing Deadline

The Form 5471 filing is attached to your individual income tax return and is to be filed by the due date (including extensions) for that return.

IRS Form 5471 Penalties

This is an important form to file because if you fail to file the form and were required to file the form you can be subject to a substantial penalty $10,000 or more for each year.

Additional penalties of up to $50,000 are charged for instances of continued failure. Any person who fails to file or report all of the information required within the time prescribed will be subject to a reduction of 10% of the foreign taxes available for credit. Continued cases of failure are also subject to additional reductions.  In addition, criminal penalties may also apply for failure to file the requisite information.

If the form is not filed, your Form 1040 would be considered incomplete and therefore considered to be unfiled leaving you open to failure to file penalties.

 

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