March 29, 1990
Penalties for Late Filing of Form 5471
WASHINGTON - Taxpayers required to file Form 5471,
Information Return with Respect to a Foreign Corporation, will be subject to penalties for
filing late or incomplete forms under a new assessment procedure.
Form 5471 is required to be filed by U.S. individuals, partnerships, corporations, and
trusts with five percent or more stock ownership in a foreign corporation. The IRS
developed the form to consolidate the filing requirements of Internal Revenue Code
sections 6035, 6038 and 6046.
The IRS said that taxpayers who failed to file complete and timely Forms 5471 will be
notified in writing from the Philadelphia Service Center as to what is needed to avoid
being penalized. Taxpayers should send the missing information promptly or establish
reasonable cause of failing to do so. The IRS said the most common examples of
- Forms 5471 which indicate that required information will be furnished upon request or
- Submitting one financial statement that consolidates data from two or more foreign
- Submitting a computer-generated copy of Form 5471 that does not conform to Form 5471 and
has not been approved by the IRS, and,
- Failure to provide financial statements on controlled foreign corporations.
Internal Revenue Code section 6038 and 6679 provide penalties for failure to comply
with Form 5471 filing requirements. To supplement existing foreign tax credit reduction
penalties provided by IRC 6038(c) the Tax Equity and Fiscal Responsibility Act of 1982
established a penalty, under section 6038(b) , of $1,000 for each failure to submit a
timely or complete Form 5471. The penalty under section 6038(b) starts at $1,000, but can
reach a maximum of $25,000 for each Form 5471, if the delinquency or deficiency in the
form is not corrected after a notice is mailed by IRS.
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