IRS Report of Foreign Bank Account (FBAR) penalties are so outrageous, they take the breath out of the room. But there are other, lesser known penalties that could devastate an international entrepreneur, or even a US retiree living abroad. These are Form 5471 penalties.
IRS Form 5471 is a form that US owners of certain foreign corporations need to file. Failure to file can result in a $10,000 penalty -- per occurrence. And, the statute of limitations on assessment is much longer than people realize.
In a recent case, the IRS assessed twelve(!) Form 5471 penalties against a Canadian consultant who did business under a Canadian corporation. This resulted in a $120,000 tax penalty. A tax penalty that Canada actually helped the IRS collect.
The Streamlined Program is designed to lessen the risk of Form 5471 penalties. It created not just FBAR amnesty, but also Form 5471 amnesty.
The question we are concerned with is - "Did you know that you had a Form 5471 filing requirement?" Your subjective intent is the critical issue. For this, we recommend that you speak with us. Remember, every one of our offshore clients made some sort of mistake. Yet, many mistakes are not large enough to make someone ineligible for the Streamlined program.
If you don't qualify for the Streamlined Program, the Full Offshore Disclosure Program is still available. We just prefer the Streamlined program because in terms of time and cost, it is much, much less onerous for our clients.
It is critical you don't make assumptions about yourself, but relay your situation to one of our experienced disclosure attorneys.
If you would like to speak to us regarding your Form 5471 issue to understand the best disclosure options for your specific situation, contact us. We can help. Call us at 888-727-8796 or email firstname.lastname@example.org. Any information you share with us will be kept confidential.