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Navigating Tax Code Important for Business as Mission Companies

By Tom Sudyk of EC Group - The US Internal Revenue Service has increased it interest in foreign corporations owned or controlled by US citizens. The IRS 5471 has been part of the US Tax code for years but last year the IRS stepped up enforcement of the substantial penalties for failing to file the form which range from $10,000 to $50,000+. Now if you file late you automatically get a $10,000 penalty for each foreign corporation.

The 5471 filing requirement includes US citizens, partnerships or corporations with ownership of more than 10% ownership of a foreign corporation or those who exercise control over a foreign corporation (for as little as a 30 day period). It is important to note that the IRS definition of ownership includes “constructive” ownership or control meaning if you have used one corporation to own another or actually can control a corporation even if you do not “own” it you may be responsible to file or face the consequences. As a 5471 filer I strongly recommend talking with your tax advisor and reviewing the IRS instructions on the 5471 at www.irs.gov/pub/irs-pdf/i5471.pdf.

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posted by Justin Forman | 12.17.2009 - 7:13 AM

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