If your U.S. company owns shares in a foreign corporation, you might be required to file Form 5471. 

This is one of the most complex and misunderstood IRS forms, but ignoring it can lead to severe penalties—starting at $10,000 per year, per return.

In this guide, we’ll walk you through who must file, what information is required, and how to stay compliant.

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Who must file Form 5471?

Form 5471 must be filed by certain U.S. persons (individuals, corporations, partnerships, and LLCs) who are shareholders in foreign corporations. You’re required to file if you meet specific ownership thresholds or have certain roles in the foreign company.

The IRS defines five categories of filers for Form 5471. If you fall into any of these, filing may be mandatory:

• Category 1: U.S. shareholders of foreign corporations that are Section 965 specified foreign corporations
• Category 2: U.S. officers or directors of a foreign corporation in which a U.S. person owns at least 10% of the stock
• Category 3: U.S. persons who acquire or dispose of 10% or more interest in a foreign corporation
• Category 4: U.S. persons who control a foreign corporation (own more than 50%)
• Category 5: U.S. shareholders of a controlled foreign corporation (CFC)

If you’re unsure whether you qualify, you can chat with a Lazo consultant here. The rules are complex and the stakes are high.

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What is Form 5471 used for?

Form 5471 is an informational return that provides the IRS with detailed information about foreign corporations owned by U.S. persons. It helps the IRS monitor foreign income, enforce Subpart F income rules, and apply anti-deferral provisions such as GILTI (Global Intangible Low-Taxed Income).

The form discloses:

• Ownership structure and changes
• Financial statements of the foreign corporation
• Earnings, profits, and dividends
• Transactions between the U.S. owner and the foreign corporation

Even if there’s no tax due, failing to file Form 5471 can result in heavy penalties.

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How do you complete and file Form 5471?

Filing Form 5471 can be complex because the required schedules and sections vary depending on your filer category.

General steps include:

1. Determine your filer category to know which schedules are required.
2. Collect detailed financial and ownership information about the foreign corporation.
3. Complete the required schedules, which may include:
   
   • Schedule A (Stock of the Foreign Corporation)
   • Schedule B (U.S. Shareholders)
   • Schedule C (Income Statement)
   • Schedule F (Balance Sheet)
   • Schedule G (Other Information)
   • And others, depending on your filing category.
4. Attach Form 5471 to your U.S. tax return (Form 1120, 1040, 1065, etc.). It’s not filed separately.

Because of the complexity, many founders work with professionals to ensure accuracy. We recommend you review this with an expert.

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When is Form 5471 due?

Form 5471 is due on the same date as your U.S. tax return, including extensions. For corporations, this is generally April 15 (or the 15th day of the fourth month after the tax year-end). For individuals, it’s April 15, with an automatic extension to October 15 if requested.

Late or incomplete filings can lead to substantial penalties.

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Penalties for not filing Form 5471

The penalties for failing to file Form 5471 are steep:

• $10,000 per year, per form, for each foreign corporation you fail to report.
• If you don’t respond to an IRS notice within 90 days, an additional $10,000 penalty may be charged for each 30-day period of continued failure, up to a maximum of $50,000 per return.

Penalties apply even if no tax is owed. This makes Form 5471 one of the most punishing non-compliance risks for U.S. founders with foreign subsidiaries.

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Common mistakes founders make with Form 5471

Many founders unintentionally fail to file Form 5471 or file incorrectly. Here are common mistakes to watch out for:

• Not realizing they qualify as filers—many founders don’t know they’re required to file based on their ownership percentage or control.
• Filing the wrong schedules—each filer category has its own required schedules, and missing one can lead to penalties.
• Incomplete or inaccurate financial data—the IRS expects detailed and accurate records, and estimates are not acceptable.
• Missing the filing deadline—Form 5471 must be submitted with your U.S. tax return. Missing this deadline exposes you to immediate penalties.

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FAQ: Quick answers about Form 5471

Who needs to file Form 5471?

U.S. persons who meet certain ownership thresholds in foreign corporations.

Is Form 5471 an informational return or a tax return?

It’s an informational return. However, failing to file can trigger penalties even if you don’t owe tax.

Do I need to file Form 5471 if my company made no income?

Yes. Even if the foreign corporation was inactive or made no money, you may still be required to file.

Can I file Form 5471 separately?

No. It must be attached to your U.S. tax return.

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Form 5471 is complex but mandatory for U.S. owners of foreign subsidiaries. If you’re unsure about your filing obligations, don’t risk penalties.

Lazo’s team of experts can guide you through the filing process and ensure your forms are complete and accurate.

Schedule a free consultation with Lazo today to get started.

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