(New) Form 5471 CFC Filing Rules – IRS Rev. Proc. 2019-40
When a person is the owner of a CFC (Controlled Foreign Corporation), they may have a Form 5471 filing requirement. The Form 5471 is a very detailed form. And, even the IRS realizes that some individuals may not be able to obtain all the necessary information required to determine if they are a CFC – and possibly have to file Form 5471.
- 1 Rev. Proc. 2019-40
- 2 (New) Form 5471 CFC Regulations
- 3 Example
- 4 IRC 958(a)
- 5 318(a)(3)
- 6 When does the Regulation become Active?
- 7 Who is Exempt from Reporting?
- 8 Form 5471 Amnesty – Golding & Golding (Board-Certified)
- 9 Recent Golding & Golding Case Highlights
- 10 How to Hire Experienced Form 5471 Amnesty Counsel?
- 11 Interested in Learning More about Golding & Golding?
Rev. Proc. 2019-40
Recently, the IRS issued a Regulation involving the filing of Form 5471, and when it may be exempt.
We will refer to the relevant portions of the Rev. Proc.2019-40:
(New) Form 5471 CFC Regulations
Pursuant to section 6038(a)(4), the IRS may require any U.S. person treated as a U.S. shareholder of a CFC to file an information return on Form 5471 with respect to its ownership in such CFC.
In section 5.02 of Notice 2018-13, 2018-6 I.R.B. 341, the Treasury Department and the IRS announced that the IRS intended to amend the instructions for Form 5471 to provide an exception from Category 5 filing for a:
- U.S. person that
- is a U.S. shareholder with respect to a CFC
- if no U.S. shareholder (including such U.S. person) owns, within the meaning of section 958(a), stock in such CFC, an
- foreign corporation is a CFC solely because such U.S. person owns stock of CFC owned by a foreign person under Sec 318(a)(3).
For example, if Michelle is a U.S. shareholder U.S. Person of a CFC in which no U.S. shareholder (including U.S. Persons) owns stock in the CFC, but rather the CFC is only a CFC because the U.S. Person owns stock in accordance with 318 (a)(3)
958(a) refers to Direct Ownership of Stock. Therefore, the regulation is referring to owners who do not “directly” own stock
What is section 318?
Refers to Constructive ownership of Stock
Refers to the General Rule
Refers to Attribution to partnerships, estates, trusts, and corporations
When does the Regulation become Active?
Who is Exempt from Reporting?
As provided by the IRS:
Accordingly, the instructions for Form 5471 (rev. December 2018) provide that a Category 1 or 5 filer does not have to file a Form 5471 if no U.S. shareholder (including the filer) owns, within the meaning of section 958(a), stock in the foreign corporation, and the foreign corporation is a specified foreign corporation or CFC solely because one or more U.S. persons is considered to own the stock of the foreign corporation owned by a foreign person under section 318(a)(3).
However, the Treasury Department and the IRS understand that, even as modified, the Form 5471 filing requirements may result in a significant undertaking for certain U.S. shareholders with limited access to information with respect to a foreign controlled CFC.
Accordingly, the Treasury Department and the IRS intend to further limit the Form 5471 filing requirements.
Form 5471 Amnesty – Golding & Golding (Board-Certified)
We specialize exclusively in international tax, and specifically IRS offshore disclosure.
We have successfully represented clients in more than 1,000 streamlined and voluntary offshore disclosure submissions nationwide and in over 70-different countries. We have represented thousands of individuals and businesses with international tax problems.
We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe.
- Learn more about the Board-Certified Tax Lawyer Specialist credential
- Learn more about the Enrolled Agent credential
- Learn more about Golding & Golding’s Case Accomplishments
- Learn more about Golding & Golding Testimonials from prior clients
We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants and Financial Professionals worldwide.
Less than 1% of Tax Attorneys Nationwide Are Certified Specialists
Sean M. Golding is one of less than 350 Attorneys (out of more than 200,000 practicing California Attorneys) to earn the Certified Tax Law Specialist credential. The credential is awarded to less than 1% of Attorneys.
Recent Golding & Golding Case Highlights
- We represented a client in an 8-figure disclosure that spanned 7 countries.
- We represented a high-net-worth client to facilitate a complex expatriation with offshore disclosure.
- We represented an overseas family with bringing multiple businesses & personal investments into U.S. tax and offshore compliance.
- We took over a case from a small firm that unsuccessfully submitted multiple clients to IRS Offshore Disclosure.
- We successfully completed several recent disclosures for clients with assets ranging from $50,000 – $7,000,000+.
How to Hire Experienced Form 5471 Amnesty Counsel?
Generally, experienced attorneys in this field will have the following credentials/experience:
- Board Certified Tax Law Specialist credential
- Master’s of Tax Law (LL.M.)
- Dually Licensed as an EA (Enrolled Agent) or CPA
- 20-years experience as a practicing attorney
- Extensive litigation, high-stakes audit and trial experience
Interested in Learning More about Golding & Golding?
No matter where in the world you reside, our international tax team can get you IRS offshore compliant.
Golding & Golding specializes in Streamlined Domestic Offshore Procedures. Contact our firm today for assistance with getting compliant.