What is Form 5471?
Form 5471 (Information Return of U.S. Persons With Respect To Certain Foreign Corporations) is an informational return required from certain U.S. taxpayers who are officers, directors, or shareholders in foreign corporations. It provides details about:
The U.S. shareholder(s)
The foreign corporation
Transactions between them
Original capital contributions
Financial statements (balance sheet, income and expense sheet for the current year of operation, etc.)
The form itself is 4 pages, but additional schedules often make it 6–7+ pages.
Who must file?
There are five filing categories (Category 1 was repealed, so effectively four). Which schedules you must file depends on your category:
Category 2: U.S. officers or directors of a CFC (not an owner) when a U.S. person acquires stock in the corporation. (Complete page 1 + Schedule G only)
Categories 3, 4, and 5: U.S. shareholders meeting certain ownership thresholds if a U.S. corporation is the 100% owner of a foreign corporation that is not a Foreign Personal Holding Company (FPHC).
Multiple categories may apply to one filer — if so, you must complete all required schedules for each category filed.
Controlled foreign corporation
If you, along with other U.S. persons, own more than 50% of a foreign corporation, it is then defined as a Controlled Foreign Corporation (CFC). Then, certain types of income (called "Subpart F Income") may be taxed and flow through to the U.S. shareholders. This would cause them to pay tax on that income on their U.S. personal tax returns.
Subpart F Income includes any types of corporate income such as dividends, interest, rental income, insurance income, offshore shipping income and personal service income under certain conditions may be treated as Subpart F income. Subpart F income is taxable on the US shareholder's personal return (or corporate return if a US corporation is the owner) in the year it occurs as ordinary income. This happens regardless of whether the income was distributed.
Dividends paid to shareholders of Foreign Corporations are occasionally eligible for a reduced qualified dividend rate (same rate as capital gains) when paid from the foreign corporation that is located in a country with which the US has a tax treaty.
When is Form 5471 due?
Form 5471 must be filed with your U.S. personal tax return or your business corporation / LLC tax return if it is the owner of the foreign corporation (Form 1040, Form 1120, etc.).
For individuals: generally April 15 (June 15 for expats).
For corporations: generally March 15 (or extended due date).
Penalties
Failure to file Form 5471 or filing late carries severe penalties under IRC Section 6038(b)(1), which apply even if the corporation has no income or losses:
$10,000 for each annual accounting period during which the failure exists.
If not corrected within 90 days of IRS notice, an extra $10,000 per 30 days (up to $50,000 additional).
❗ Important notes:
A $10,000 is a "disclosure penalty", unrelated to the actual tax consequences of the information provided on Form 5471.
Not filing keeps your tax return “open” — the three-year statute of limitations does not begin until Form 5471 is properly filed.
Here is the scanned copy of an official IRS letter informing its recipient about the $20,000 Penalty Assessment for "Failure to file Form 5471":
Common misconceptions
No “almost dormant” corporations: There is no such thing as “almost dormant.” Either you qualify as dormant (rare), or if conditions aren’t fully met, you must file a complete Form 5471.
Net Operating Losses (NOLs): NOLs do not protect against penalties. Penalties apply even if no tax is due. Since the penalty is for non-disclosure, not unpaid tax, NOLs are irrelevant.
Pricing for Form 5471 preparation
Form | Description | Price |
Form 5471 | Base price | $625 |
| Additional Schedule I and Schedule P for reporting on behalf of another U.S. shareholder (combined) | $150 |
FAQs on Form 5471
Q: I own a foreign corporation but receive no income. Do I still need Form 5471?
A: Yes. There is no checkbox to exempt you from filing due to low income. Even if you report zero income on Form 1040, Form 5471 must still be attached to your U.S. return to disclose foreign assets that you currently do not include as part of your taxable income (which, for example, puts you below the filing threshold for Form 1040). Not filing Form 5471 exposes you to penalties.
Q: Can TXF prepare Form 5471 as a stand-alone form?
A: No. Form 5471 is an informational return submitted to the IRS as an attachment to Form 1040 (or 1120). The calculations performed on Form 5471 correspond with specific lines on Form 1040, and differences in accounting periods often require adjustments. We do not prepare it as a stand-alone form and do not advise that you work with tax firms willing to do so.
Additionally, it's impossible to prepare Form 5471 for one year and then copy it for another year. "Copying" the same form for multiple years puts you at risk of filing an incorrect return, because specific schedules do not simply roll over but are dependent on prior year numbers (decrease or increase). Moreover, suppose you received any distributions from the company (unless the corporation is dormant, this is highly probable). In that case, those distributions must be reported on Form 1040 and will affect all other calculations on the form, increasing the odds of the IRS examining your return.
Q: My siblings and I (all U.S. citizens) own a foreign corporation. Do we each file Form 5471?
A: No. One consolidated Form 5471 may be filed reporting all U.S. shareholders. Each family member receives a copy. One tax preparer must be used to facilitate information sharing. However, unrelated shareholders may need separate filings unless coordination is guaranteed (the shareholder responsible for filing includes your information when filing Form 5471).
Q: How can I add another U.S. shareholder of the same foreign corporation who is not a TFX client and file Form 5471 on their behalf?
A: When completing a tax questionnaire in your TFX account, follow these steps:
Open a Tax Questionnaire.
Navigate to the Life & Income > Income Sources TQ section and click Yes next to the statement: I have ownership in a corporation, partnership or trust.
Navigate to Income > Corporation & Trust > Entity List and create a non-U.S. corporation entity.
When answering the questionnaire for the non-U.S. corporation entity, scroll down to the Documents section, and select Yes for the question Will you file Form 5471 on behalf of any other U.S. shareholder?
Q: I own my own French company (SARL). Do I need to file Form 5471?
A: Yes. A SARL or EURL is considered a foreign corporation and requires filing Form 5471. By contrast, an EI (Entreprise Individuelle) is not considered a corporation and can be reported via Schedule C (Form 1040).
Q: Form 5471 is for corporations, but what about foreign partnerships?
A: Foreign partnerships are reported on Form 8865, not Form 5471. Once you complete a tax questionnaire, we will determine the correct form based on your situation.
Q: I'm up to date with my U.S. returns but never filed Form 5471 for my foreign corporation. What are my options?
A: You may qualify for the Delinquent international information return submission procedures. This program can also be used if you've failed to file other informational returns, e.g., Form 3520-A (Annual Information Return of Foreign Trust With a U.S. Owner). This program allows late filing if you:
Have not filed one or more required international information returns,
Have reasonable cause for not filing,
Are not under IRS audit or civil/criminal investigation,
Have not already been contacted by the IRS about the missing forms.
The Delinquent international information return submission procedures filing requirements generally include:
Filing three years of Form 1040-X (Amended U.S. Individual Income Tax Return),
Filing three Forms 5471 (assuming this is a missing form), one for each year,
Attaching a reasonable cause statement (an explanation of your failure to file),
Filing Form 8938 (FATCA) if the balance on the company accounts (previously unreported) puts the taxpayer over the threshold.
❗ Important note: If you are at least a 10% shareholder in a foreign corporation, you must file Form 5471. Failure to do so can carry very stiff penalties.
Pricing, in addition to the fee for Form 5471:
$175 for Form 1040-X (Amended U.S. Individual Income Tax Return) if no corporate income was distributed or corporate income was reported as salary/dividends on Form 1040 → Form 1040 does not need to be amended.
$550 ($650 if you qualify for our Expanded Income Bundle) if distributions were not reported or corporate income was reported as self-employment but was actually a salary → it requires reworking Form 1040.
Note: The 20% multi-year discount applies to delinquent Forms 5471 and 3520-A only if:
At least 3 forms are included in the same Engagement Letter (EL), and
They all relate to the same entity.
For example, Joe owns a French corporation (SARL) but failed to report this on Form 5471 and reported this as self-employment income on Schedule C instead. Fixing 3 years would cost him $1,920 = ($175 for the Form 1040X + $625 for Form 5471) *3 *.8 (a multi-year discount of 20% for filing 3 years at the same time)
Q: Is it advisable to classify an entity as disregarded from its owner?
A: No, we don't recommend it. Doing so replaces Form 5471 with Form 8858 and Schedule C, without reducing complexity or penalties.
Q: I own a corporation and pay myself a salary. How do I report this?
A: Report salary on your personal Form 1040 in addition to filing Form 5471.
Q: I own a dormant corporation I plan to dissolve this year. Do I still need to file Form 5471?
A: Yes. Corporations that haven't experienced any activity don't necessarily qualify as dormant. Creation or dissolution years always require filing because share acquisitions/dispositions occur. There is a confusing clause in the instructions that is often misinterpreted:
"No foreign corporation shares (other than the directors' qualifying shares) were sold, exchanged, redeemed, or otherwise transferred, nor was the foreign corporation party to a reorganization."
Which logically leads to questions like this:
I founded the corporation. I am the president, and all the initial shares were issued to me at the company's founding. Does this mean that I am the director and, therefore, the shared activity is exempt?
The quote referenced above means that issuing qualifying shares to directors is an exempt event, and a corporation may remain dormant if no other events occur. However, the director wears many hats. You are not only the self-appointed director. You are also a shareholder. The major reportable event is a company shareholder's acquisition and disposition of shares. Because of this, companies are not considered dormant in the year when they are created and in the year when they are dissolved.