Form 5471: Return of US Persons With Respect to Certain Foreign Corporations

Some US persons who are either directors or shareholders of foreign corporations are liable for filing Form 5471. This form must be given with all the detailed reports with the activity of a foreign company. This form is very confusing and serves different purposes from the tax-related aspects. Form 5471 is also called Return of US Persons With Respect to Certain Foreign Corporations. When we talk here about the US person, they can include a resident or citizen of the US, Partnership, corporation, trust, or other estates.

Who needs to file Form 5471?

As per IRS, Form 5471 must be filed by a US person. The US person can be either a citizen or resident of the US. They are further categorized under different “Filers” with different schedules associated with them. Each of the schedules has different requirements. The term “Corporation” is now expanded by the IRS that also includes the foreign limited liability companies and international business companies. While considering the foreign company as the corporation, the liability of the foreign company is thoroughly considered. There are greater chances of the company be considered as the liability when there is no or limited liability.

Impact of Form 5471 on US tax liability:

There are many tedious laws in place by the IRS to ensure that no liable person evades the US tax just by setting up an offshore company. So, Form 5471 looks after all the income reported by the individual from different sources. It scrutinizes all the liability involved to the corporations for the return of US persons with respect to certain foreign corporations. So, any of the US-sourced income is applicable to the US tax.

Information required to file Form 5471:

There is comparatively fewer information required while filing Form 5471. This information will include name, address, and contact number. It also has to provide other information of corporation like balancesheet, income statement as per the US dollars currencies with proper GAAP accounting method. The foreign corporation if considered as a controlled foreign corporation (CFC), they need to provide shareholders information too.

Deadline for Form 5471:

The due date for Form 5471 is 15th March for most of the corporations. However, in certain cases, the extended due date will be given by the IRS. In the case of the individuals, the due date is 15th April or the due date extension accordingly.

Where to file it?

There is two copies for filing Form 5471. The first copy is filed for tax return (Form 1040, 1120, 990 or 1065) and the other copy with IRS International Division.

Why you need to comply?

If failing to comply with filing Form 5471, then one has to pay huge penalties. For every year, the penalty may go up to $10,000. However, in case of a reasonable cause, the IRS may waive the penalty. If the IRS notifies the failure to comply then the penalty may go up to $20,000. The IRS may also charge additional penalties.

So, it is very important to file Form 5471 as per the IRS guidelines. Many of the complex aspects are associated with Form 5471 filing which can be properly done by the experts.

Meru Accounting, an accounting service provider company provides Form 5471 filing service. They have a nice experience of dealing with different foreign corporations of the US with providing excellent service.


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