Automatic $10,000 penalty for failure to file Form 5471
Form 5471 is required to be filed by all U.S. taxpayers who have equity or controlling interests in a Controlled Foreign Corporation ("CFC") as defined by the IRS.
Beginning January 1, 2009, the IRS will assess an AUTOMATIC penalty of $10,000 for each missed CFC filing, meaning that the $10,000 penalty will be assessed per year, and per entity.
For example, Ben is a resident of California and a citizen of the United States. Ben formed a Bahamas corporation for asset protection and international investing purposes. Ben is required to file the Form 5471 each year, and the failure to file the Form 5471 will trigger an automatic $10,000 penalty to Ben for each year that he does not file.
Labels: asset protection, controlled foreign corporation, form 5471, irs, offshore
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