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What are IRS Form 5471 penalty triggers?

Obviously, not filing a Form 5471 at all when required to do so can trigger a Form 5471 penalty. But also, any Form 5471 that is filed but that the IRS considers not “substantially complete" may result in Form 5471 penalties. In this article we will discuss what types of mistakes on a Form 5471 could lead to "substantially incomplete" penalties and what you can do to protect yourself from an IRS international audit team that admits it is hyper-aggressive when it comes to assessing Form 5471 penalties.

What is GILTI? Six Global Intangible Low-Taxed Income debunked

GILTI was created in Section 951A of the US tax code by the 2017 Tax Cuts and Jobs Act, aka, Tax Reform. GILTI involves incredibly complicated calculations and huge additional compliance burdens starting for tax year 2018, and for certain types of shareholders in foreign corporations, can dramatically increase taxes. In this article, we debunk six myths surrounding GILTI, so you can lower your tax bill, or the tax bill of your clients'.

What is IRS Subpart F? How has Tax Reform changed it?

When the IRS introduced Subpart F, it completely changed the the rules of international tax planning. Things have never been the same. Yet Congress was not done. The Tax Cuts and Jobs act of 2017, aka Tax Reform, change Subpart F and not for the best. So what are the Subpart F rules? Why are they so awful? What can be done to avoid Subpart F? This article answers these questions.

US Tax Advisors, Accountants and Preparers for US-UK citizens and expats

What to do if you are late or failed to file an IRS Form 5471

IRS Form 5471 is a form required to be filed by US owners of foreign corporations. People often contact us asking what to do if they realize that they have unfiled or misfiled Forms 5471. Here are the answers to that, and other common questions we get.

Form 5471 filer categories [Pre-tax reform]

Note: Some of this information is likely obsolete and was written pre-Tax Reform and is left up as an explanation of the old rules. Be sure to check back as we update our website.

How to understand IRS Form 5471 better than the IRS does

IRS Form 5471 was created by a law that required domestic corporations to provide their asset and balance sheets on their foreign corporations. The hope was to stop them from hiding money overseas. Things have "evolved" since the inception of the law. Now: IRS Form 5471 requirements just aren't for large multi-nationals anymore; US taxpayers are often surprised to learn that they are not in compliance.

Downward attribution: How a non-US controlled corporation magically becomes US-controlled

As kids, my siblings and I would play a game called Opposite Day. When you said something, the meaning was intended to be the exact opposite of the words you used. Maybe you enjoyed had a similar game. And generally, it was harmless fun, but the game would grow weary. Likewise, Tax Reform created its own opposite day. Now a foreign-controlled corporation may now considered to be the opposite, as US-controlled foreign corporation, creating a weary game. A very weary game indeed.

The benefits of using IRS streamlined disclosure program for missing or incorrect Form 5471s

IRS Report of Foreign Bank Account (FBAR) penalties are outrageous. 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.

Canada collects $120,000 in Form 5471 penalties for the IRS

Today we want to talk about the Dewees v US Claim for refund suit against the US government. It seems that when someone find out they have FBAR reporting requirements and decide to "come clean"'s not always enough. If not done correctly, that decision can open a can of worms. 

OVDP for your foreign corporation or other entity?

The IRS Offshore Voluntary Disclosure Program (OVDP) is not just for individuals. Thanks to a harsh and extensive international tax form penalty regime, there can be a great incentive to enter into an offshore program to cure any of these unfiled or substantially incomplete forms:

What to do about a frozen Swiss and other bank accounts

Certain financial institutions --- not just in Switzerland --- are threatening and actually freezing bank accounts for lack of US tax and bank reporting compliance. In this article, we will explain why bank accounts are usually frozen and the action you may be able to take to regain access to your funds once again. 

Streamlined Foreign Offshore Eligibility

The liberalized 2014 Streamlined Foreign Offshore Process eligibility were on June 18, 2014 and remain in effect as of this writing.  There are many benefits to this disclosure program, mainly a 0% offshore penalty by default. In this article, we outline the steps to determine if you are eligible, and the procedure to complete a successful streamlined...

Was your IRS Offshore Voluntary Disclosure submission declined?

If you have made what you thought was a timely and complete Pre-Clearance or Offshore Voluntary Disclosure Program (OVDP) submission, you may be wondering why you were denied or rejected. The good news is there are alternatives available to...

IRS IPU: Is your Corporation a Controlled Foreign Corporation (CFC)?

The reason CFC or non-CFC the status is so important is because once a CFC determination is made, this triggers the possibility of the dreaded "Subpart F income"...

International taxation Principles: understanding the fundimentals

No matter if you are a US-based investor, a US expatriate, or an "other" US person living abroad, I am going to share three basic international taxation principles to you so you can get working outline how international taxation really works....

Understanding the IRS OVDP Offshore Penalty

The current 2012 Offshore Voluntary Disclosure Program presents taxpayers faced with a potentially high IRS offshore penalty (up to 50% of foreign account value per year, for unfiled FBARs) the chance to disclose their foreign assets voluntarily and accept an IRS Offshore Penalty of 27.5%, ...

Form 5471 and Dormant Foreign Corporations

Note: Some of this information is likely obsolete and was written pre-Tax Reform and is left up as an explanation of the old rules. Be sure to check back as we update our website. The reporting requirements for IRS Form 5471 are confusing, time - consuming and may not actually help the IRS close the alleged "tax gap." You need to understand what 'category of filer' you are, which Schedules you should fill out, and? The Form has to be completed for every foreign ...

Understanding the many, many schedules of IRS Form 5471

Form 5471 Schedules - There are 12 different schedules that you may need to fill out; you determine which schedules you need to complete based on your filing category. The Form 5471 schedules..

Controlled Foreign Corporations: Why the IRS cares so much

Prior to 1962, it was easy for an offshore corporation to avoid taxes. It worked as simply as this: A US person could fund an offshore corporation and be its sole shareholder, and that corporation could invest and earn passive income.

FATCA - will it be around forever?

I really hope not. There were hopes and rumblings that FATCA may go away some day soon; but upon reading remarks from Acting Assistant Attorney General Caroline D. Ciraolo at the American Bar Association’s Tax Section midyear meeting on Friday, we can now say that doesn't ...

FATCA - What is a 'Specified Foreign Financial Asset'?

Once you've determined that you need to file a Form 8938, you'll need to know what to report. The IRS has not made it a simple, quick process, and some of the requirements cause duplicate ...

2016 IRS tax filing deadlines for Foreign Income and Expats

Expats, or those with foreign income, often have different tax filing deadlines. They also often have more Forms to complete!

September 2015 OVDP Webinar

Thanks to all who joined us on our live OVDP Webinar on September 11th.  It was a great success -  be sure to check back in for additional live webinars as they come back in. Below is the webinar as well as the transcript.

What is the IRS statute of limitations on foreign income?

Maybe you have some unreported income earned overseas. Maybe you have some foreign bank accounts overseas that you never knew you had to report to the US Treasury. Or maybe you are just doing a favor for "your friend," doing some research to see if "your friend" really has to report their ...

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