For U.S. persons owning foreign corporations (you may be one of them), your focus is, rightly, on making your business work and complying with the rules of where your business is. This can be where you yourself are located or where your business is incorporated. Either way, complying with local rules and law is typically your top priority. But your local law won’t always mix well with U.S. rules.
One such instance is your tax year. The U.S., generally, requires form 5471 to be done on a calendar year basis. However, your local jurisdiction may be on a fiscal year. Having both fiscal year and calendar year reporting obligations can complicate your business. And simply putting your fiscal-year bookkeeping onto the calendar-year form may not be a good fix (and is technically against the rules).
What is the downside of not having calendar year GAAP standard information on your U.S. form 5471? You risk being “substantially incomplete,” meaning your return is considered so wrong that the IRS gets to treat it as unfiled. This means penalties: $10,000 USD per form per year.
Getting your form 5471 done correctly and timely is the way to avoid these penalties. Contact IRS Medic to get your form 5471 filed right.
— The IRSMedic Team
