The United States has taxing authority over some foreign corporations which have U.S. citizens or Greencard holders as officers, directors or shareholders even if such foreign corporations don’t have permanent establishments in the U.S. or don’t have any income sourced from the U.S.
Report of Foreign Bank and Financial Accounts (FBAR)
U.S. Corporations and Individuals with bank accounts abroad must also file an FBAR. The 2015 deadline for filing an FBAR is June 30th, 2016. If you are a United States citizen or a Greencard holder and you own a foreign corporation, you must declare in the U.S. or risk being fined $10,000 or more in penalties for late filing or nonfiling.
Additional Filing Requirements
If you are a United States “taxable resident” and you own 10% or more of a foreign corporation, you must file Form 5472 Information Return of U.S. Persons with Respect to Certain Foreign Corporations to satisfy reporting requirements as stipulated in sections 6038, 6046 and related regulations.
Form 5472 – Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business
Form 5472 can be defined as an information return for United States “taxable residents” with respect to specific foreign corporations. Form 5472 includes mechanisms allowing the United States government to tax foreign profits. The form has 5 categories of filers depending on stock ownership as well as corporation control.
You may also be required to file other forms apart from Form 5472. You must also include the income of any foreign corporations in your personal and corporate U.S. Tax Returns. The deadline for filing personal returns for 2015 was April 18th, 2016, and for those who filed for an extension the deadline is October 15th, 2016.
If your foreign corporation is doing business in the U.S., you may also need to file Form 1120F. Owners of Foreign Corporations & U.S. Corporations doing business in foreign countries must file by the corporate tax deadline for 2015 which was March 15th, 2016. For those who filed for an extension, the deadline is September 15th, 2016. Also, if you are doing business in the state of florida, don’t forget to renew your florida corporate registration annually, sunbiz.org.
If you own 10% or more of a foreign corporation and need to file a Foreign Bank Account Report, or not sure whether you need to file, give us a call. At Rosillo & Associates, we take care of your tax needs for long term financial success.