Posts

2023 Form 5471 Deadline in 2024 | International Tax Lawyer & Attorney

/in , /by

IRS Form 5471 is one of the most important US international information returns. In this brief essay, I will discuss the tax year 2023 Form 5471 deadline in the calendar year 2024.

2023 Form 5471 Deadline: What is Form 5471

Form 5471 is a US international information return. In general, the IRS uses Form 5471 to collect information about certain US persons who are officers, directors, or shareholders in certain foreign corporations. These US persons, in turn, use Form 5471 to satisfy the reporting requirements of the IRC (Internal Revenue Code) §§965, 6038 and 6046 as well as related regulations. In other words, US taxpayers utilize Form 5471 to comply with their reporting obligations concerning their ownership of and transactions with a foreign corporation.

Form 5471, however, is more than just an international information return. It also contains the relevant schedules related to income recognition by US owners of foreign corporations through the operation of anti-deferral tax regimes such as Subpart F rules, 965 tax and GILTI tax.

2023 Form 5471 Deadline: Who Must File It

Determining whether you are required to file a Form 5471 and which schedules you must attach to it may also be very complicated. As a result of the 2017 tax reform, Form 5471 now sports a total of five categories of required filers; two of these categories contain three sub-categories. In other words, the instructions to Form 5471 describe now a total of nine categories of filers!

Once you determine that you fall into one of these categories, you must carefully determine which schedules, statements and attachments you must complete in order to fully comply with your Form 5471 obligations.

I should also note that a separate Form 5471 is required for each applicable foreign corporation. This is the case even if one foreign corporation owns the other; there is no consolidated group filing under Form 5471.

2023 Form 5471 Deadline: Complexity

Form 5471 is incredibly complex. It forces its filers to convert foreign financial statements to US GAAP. It further requires reporting of an astounding range of transactions between a foreign corporation and its US owners as well as the affiliates of US owners. Finally, as it was already mentioned above, US taxpayers use Form 5471 schedules to calculate the income that they must recognize under the various anti-deferral tax regimes.

Thus, completing a Form 5471 may require a significant effort and a lot of time. This is why you need plan well ahead to make sure that you file your Form 5471 timely.

2023 Form 5471 Deadline: Penalties

A failure to timely file an accurate Form 5471 may result in imposition of large IRS penalties. Moreover, since Form 5471 is used to satisfy a variety of tax obligations, different penalties may be imposed under different IRC sections.

For example, a failure to file Form 5471 Schedule M may result in the imposition of a $10,000 penalty pursuant to §6038(a). A failure to file Form 5471 Schedule O is a violation of §6046 and the IRS may assess a separate section 6046 is subject to a $10,000 penalty for each reportable transaction.

2023 Form 5471 Deadline: When to File and Where

All filers (unless they fall under an exception) must attach their Forms 5471 to their income tax returns (if applicable, a partnership return or tax exempt organization return). Both, the income tax return and Form 5471 must be filed by the due date, including extensions, for that return.

In other words, if you are an individual filing Form 1040, your 2023 Form 5471 deadline is April 15, 2024. If you file an extension, the deadline will shift to October 15, 2024.

Contact Sherayzen Law Office for Professional Help With Your 2023 Form 5471 Deadline

If you are required to file a Form 5471 for the tax year 2023, contact Sherayzen Law Office for professional help. We have successfully helped US taxpayers around the world with their Form 5471 compliance, and we can help you!

Contact Us Today to Schedule Your Confidential Consultation!

Automatic 5471 Penalties Submitted With Form 1120

/in , /by

In an earlier article, I discussed various penalties generally associated with late or inaccurate filing of Form 5471 (this form is required under IRC Section 6038(a) to provide information with respect to certain US shareholders of foreign corporations). These penalties are generally subject to “reasonable cause” exception and are not imposed in every case.

Since 2009, however, this is not the case. Starting January 1, 2009, the IRS automatically assesses a $10,000 penalty (under IRC Section 6038(b)(1)) for each late filed Form 5471 if the related Form 1120 is not filed timely. Note, the automatic assessment of penalty results in this case even if there is no tax due.

Furthermore, IRC Section 6038(c) provides for a 10% reduction of the foreign taxes available for credit under IRC Sections 901, 902 and 960. Per IRC Section 6038(c)(3), this reduction to the foreign taxes can be applied in addition to the monetary penalty. It is important to realize that the automatic assessment of the $10,000 penalty does not preclude a later assessment under IRC Section 6038(c).

In addition, the IRS will also assess the penalty for the failure to file income tax returns (i.e. Form 1120) under IRC Section 6651(a)(1). The penalty is 5% of the tax required to be shown on the income tax return for each month (or fraction thereof) during which such failure continues. The amount of the penalty shall not exceed 25%. No penalty is applicable under IRC Section 6651(a)(1) if no underpayment of tax is shown on the return.

There is an interesting procedural twist with respect to automatic assessment of penalties – the IRS does not want you to include the reasonable cause statement together with Form 5471 filed late together with Form 1120. Rather, the IRS Service Centers will first send the taxpayer a Notice to Respond and the taxpayer can respond with a reasonable cause statement.

Whether or not to follow this procedural suggestion will depend on the individual case and such decision should be made by your tax attorney.

Of course, the situation is radically different if Form 1120 has already been timely filed. In this case, the taxpayer must file Form 1120X with the late Form 5471 and he should include his reasonable cause statement.

Contact Sherayzen Law Office For Help with Form 5471 Penalties

If you have not filed your Form 5471 yet or if you are facing a penalty for the already filed Form 5471, contact Sherayzen Law Office for legal help. Our experienced international tax firm will thoroughly analyze your case, present options for proceeding forward, prepare all of the required documentation and tax forms, and rigorously represent your interests during your negotiations with the IRS.