10Mar 2023 by Pat Geddie
Form 5472- The Hidden Reporting Requirement for Foreign-Held Disregarded Entities

Form 5472- The Hidden Reporting Requirement for Foreign-Held Disregarded Entities

Tax Law
By Anthony Diosdi There is a perception by many countries that the United States is the world’s largest tax shelter. This is because unlike many countries, the United States does not require public disclosure of ownership of its entities, (in particular Limited Liability Companies (LLCs)), or publishing of year-end financial statements for public viewing. The lack of transparency has allowed nonresidents of the United States to form a domestic shell to avoid paying foreign income taxes, hide money or commit other acts of wrongdoing. Historically, nonresidents established shell companies in the United States as domestic disregarded entities.On December 13, 2016, the Treasury Department and the IRS issued final regulations regarding new reporting requirements for domestic disregarded entities wholly owned by a nonresident of the United States. For the purposes of…
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27Aug 2020 by Pat Geddie
Demystifying IRS Form 5472

Demystifying IRS Form 5472

Tax Law
By Anthony Diosdi In order to effectively audit the transfer prices used by a U.S. subsidiary of a foreign corporation, the Internal Revenue Service (“IRS”) often must examine the books and records of the foreign parent corporation. Historically, foreign parties have resisted making their records available to the IRS, or have not maintained records sufficient to determine arm’s length transfer prices. In response, Congress enacted the requirement that each year certain reporting corporations must file Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business, and maintain certain records. See IRC Sections 6038A and 6038C. A domestic corporation is a reporting corporation if, at any time during the taxable year, 25 percent or more of its stock, by vote…
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