TERRY BIRRELL
CERTIFIED PUBLIC ACCOUNTANT
N
ACTION BY YEAR-END RECOMMENDED
TO ANYONE WITH DIRECT OR INDIRECT TIES TO FOREIGN CORPORATIONS
Beginning January 1, 2009, the Internal Revenue Service Center will automatically assert penalties on late filed Forms 5471. Taxpayers are encouraged to submit delinquent Forms 5471 for past income tax periods prior to January 1, 2009, in order to avoid the penalty.
The penalty for late filing is a monetary penalty of $10,000 for each Form 5471. The same penalty applies if the Form 5471 does not include complete and accurate information as described in Section 6038(a). In addition, a nonmonetary penalty in the form of a 10% reduction of the foreign taxes available for credit applies.
Thus, if an entity has a reportable interest in two foreign corporations and fails to file, the monetary penalty for late filing would be $20,000 per year.
Certain U.S. citizens and U.S. residents who are officers, directors, or shareholders in certain foreign corporations are responsible for filing Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations.
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Foreign Bank Account Reporting
Revised Form TD F 90-22.1 Released
A revised Form TD F 90-22.1 was recently released. This form is to be used for filings after December 31, 2008. Please refer to the revised form as you gather your 2008 information.
Foreign Bank Account Reporting
Due June 30th
US persons - individuals, corporations, and other entities - are required to file Form TD F 90-22.1 by June 30th. Extension of the income tax return does not extend FBAR reporting.
Although the anacronym FBAR refers only to bank accounts, other financial accounts must also be reported. Civil penalties for non-willful failure to file range up to $10,000 for each failure.
Copyright 2008. Terry L. Birrell. All rights reserved.