On April 16, 2019, the Large Business and International (LB&I) Division of the Internal Revenue…
The IRS Large Business and International division (LB&I) has announced a new Loose Filed Forms 5471 compliance enforcement campaign
The new Loose Filed Forms 5471 targeted enforcement campaign was identified through LB&I data analysis and suggestions from IRS employees. IRS employees likely received many Loose Filed Forms 5471 that were not properly filed, as a result, the suggested the enforcement campaign. The IRS Loose Filed Forms 5471 enforcement campaign goal is to improve return selection, identify issues representing a risk of non-compliance, and make the greatest use of IRS limited resources.
Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations, must be attached to an income tax return (or a partnership or exempt organization return, if applicable) and filed by the return’s due date including extensions. Some taxpayers are incorrectly filing Forms 5471 by sending the form to the IRS without attaching it to a tax return (or partnership or exempt organization return, if applicable).
If a Form 5471 is required to be filed and was not attached to an original return, an amended return with the Form 5471 attached should be filed. The goal of this enforcement campaign is to improve compliance with the requirement to attach a Form 5471 to an income tax, partnership or exempt organization return.
This campaign indicates the IRS’ renewed focus on Forms 5471 and taxpayers’ foreign business activities. We expect increased audit activity for clients with noncompliant Forms 5471 and foreign business activities.
Patel Law Offices has consulted with hundreds of clients regarding their offshore asset and income compliance issues. Patel Law Offices is a law firm dedicated to helping clients resolve complicated tax, criminal tax, and international tax problems. Our firm assists (and defends) clients and their advisors to legally disclose (and legitimize) foreign assets.