Find US tax compliance for offshore company

Now that your business is offshore, make sure you keep up with your US tax filing obligations. You’ll need to report your foreign corporations and international bank accounts to the IRS each and every year.

The most critical offshore tax form is the Report of Foreign Bank and Financial Accounts, Form FinCEN 114, referred to as the FBAR. Anyone who has more than $10,000 offshore will need to file this form.

The penalty for failing to file the FBAR is $25,000 or the greatest of 50% of the balance in the account at the time of the violation or $100,000. Criminal penalties for willful failure to file an FBAR can also apply in certain situations.

In addition to filing the FBAR, you must report the account on your personal return, Form 1040, Schedule B.

Other international tax filing obligations include:

• Form 5471 – Information Return of U.S. Persons with Respect to Certain Foreign Corporations.

• A foreign corporation or limited liability company should review the default classifications in Form 8832, Entity Classification Election and decide whether to make an election to be treated as a corporation, partnership, or disregarded entity.

• Form 8858 – Information Return of U.S. Persons with Respect to Foreign Disregarded Entities.

• Form 3520 – Annual Return to Report Transactions With Foreign Trusts.

• Form 3520-A – Annual Information Return of Foreign Trust.

• Form 5472 – Information Return of a 25% Foreign-Owned U.S. Corporation.

• Form 926 – Return by a U.S. Transferor of Property to a Foreign Corporation.

• Form 8938 – Statement of Foreign Financial Assets was introduced in 2011 and must be filed by anyone with significant assets outside of the United States.

Failure to file these forms can open you to all kinds of penalties and risks, so do it right and don’t fall behind. The penalties for failure to file an offshore form are much higher than for failing to file a typical domestic form late.

Of course, I hope you will select Premier Offshore to handle your US compliance needs. But, no matter who you choose, be sure it’s done right.