Form 5471

We specialize in the preparation of Form 5471. U.S. taxpayers may be required to file Form 5471 if they’re a shareholder of a foreign corporation.

Foreign corporations - Form 5471

Certain U.S. citizens and residents who are officers, directors, or shareholders in certain foreign (i.e. non-U.S.) corporations may be required to file Form 5471 to report certain information with regards to those foreign corporations to the IRS. Individual taxpayers file Form 5471 as part of their U.S. income tax return (Form 1040).

Questions?

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Filing requirements

There are five ‘filing categories’ for Form 5471. A taxpayer must complete Form 5471 and all schedules and statements that apply to his filing category. Generally, U.S. citizens who own at least 10% (directly, indirectly, or constructively) of the shares of a foreign corporation may be required to file Form 5471. U.S. citizens who own more than 50% of the shares of a foreign corporation are required to file additional schedules and statements. However, even if a U.S. citizen does not (directly) own any of the shares of a foreign corporation, he may still be required to file Form 5471, for example if he indirectly owns shares through his nonresident spouse.

What information must be provided?

All taxpayers who are required to file Form 5471 must include their personal information as well as information about the foreign corporation. Depending on the filing categories that apply, an income statement, balance sheet and data with regards to transactions between the foreign corporation and its shareholders (such as loans, distributions, contributions, etc.) must be included.

New tax filing and tax payment obligations were recently introduced by the IRS under Internal Revenue Code section 965. Section 965 requires U.S. citizens and residents who are shareholders of a foreign corporation to pay a transition tax on the untaxed foreign earnings of certain specified foreign corporations as if those earning had been repatriated to the United States. In addition, under section 951A, U.S. shareholders of ‘controlled foreign corporations’ (CFCs) may be required to include in gross income their share of so-called Global Intangible Low-Taxed Income (GILTI).

Penalties for not filing Form 5471 and for filing an incomplete or incorrect Form 5471

The penalty for failure to file Form 5471 is at least $10,000. Penalties may also apply if Form 5471 is filed, but is not substantially complete. If you filed your individual income tax return and should have filed a Form 5471 as part of your tax return, but failed to do so, or if you filed an incorrect or incomplete Form 5471 with your tax return, you should file a corrected Form 5471 with an amended individual income tax return.

Form 5471 may be required when a U.S. taxpayer is a shareholder of a German GmbH, a Dutch BV or a French Sarl.

The information needed for the preparation of a Form 5471 includes the foreign corporation's financials, such as the income statement and balance sheet, as well as the corporate tax return that's filed in the corporation's country of residence.

Our tax preparers are multi-lingual. Let us communicate directly with your German, Swiss, Dutch or French tax advisor.

Corporate Reporting at Sanders

Our corporate tax team specializes in the preparation of the forms the IRS requires to be filed with regards to foreign corporations with U.S. shareholders.

Most corporations that are foreign from a U.S. perspective are subject to tax in another country. Their financial statements may not be in English, whereas all information provided to the IRS on Form 5471 must be in English. Sanders US Tax Services specializes in the preparation of Form 5471 and other similar tax information returns. With offices in Switzerland, Germany and the Netherlands, our multi-lingual U.S. tax preparers are experts in Form 5471. Contact us today for more information and ask us how we can help you to make sure you’re tax compliant.

Frequently asked questions about the Form 5471

Who is required to file Form 5471 with the IRS?

U.S. citizens and residents who are officers, directors, or shareholders in certain foreign corporations may be required to file Form 5471. This includes individuals who own at least 10% (directly, indirectly, or constructively) of the shares in a foreign corporation. Even if you don’t directly own shares—for example, if shares are owned by a nonresident spouse—you may still have a filing obligation. There are five different filing categories that determine the extent of reporting required.

What information do I need to provide when filing Form 5471?

Form 5471 requires personal taxpayer information and detailed financial and ownership data about the foreign corporation. Depending on your filing category, this may include the corporation’s income statement, balance sheet, and details on transactions between the corporation and shareholders (e.g., loans, dividends, capital contributions). You may also need to report income under IRS Sections 965 (transition tax) and 951A (GILTI).

What are the penalties for not filing or incorrectly filing Form 5471?

The IRS imposes a penalty of at least $10,000 for failing to file Form 5471 or for filing an incomplete or inaccurate form. Additional penalties may apply for continued failure to file or correct errors. If you filed your U.S. tax return but omitted or incorrectly filed Form 5471, you should submit a corrected form along with an amended tax return as soon as possible.