2026 Guide to IRS Form 5471: Foreign Corporation Reporting

What is Form 5471?

Form 5471, also known as “Information Return of US Persons With Respect to Certain Foreign Corporations,” is a reporting tool used by US persons to disclose their ownership interests in foreign corporations.

The form is mandated under IRS regulations (specifically under Internal Revenue Code Sections 6038 and 6046) to gather comprehensive information about the foreign corporation and the US person’s relationship with it.

What is the purpose of Form 5471?

The primary purpose of Form 5471 is to enable the IRS to monitor and tax the income generated by US taxpayers through their ownership interests in foreign corporations.

This reporting is essential for preventing tax evasion, ensuring compliance with US tax laws, and maintaining transparency in international financial transactions.

Who must file Form 5471?

Determining who must file Form 5471 is essentially a two-step process: you must first be a US person and then meet the specific criteria of one of the five Filer Categories established by the IRS.

Before looking at ownership percentages, you must fit the IRS definition of a US person. This includes:

• Individuals: US citizens and resident aliens (Green Card holders or those meeting the Substantial Presence Test).

• Entities: Domestic corporations, domestic partnerships, and domestic trusts or estates.

Form 5471 Category of Filers

Form 5471 Ownership Thresholds

The filing obligation generally applies to US persons who meet specific ownership thresholds in a foreign corporation:

• Direct Ownership: Owning at least 10% (by vote or value) of the foreign corporation’s stock directly.
• Indirect Ownership: Owning at least 10% (by vote or value) of the foreign corporation’s stock through other entities, such as a partnership, estate, or trust.

Controlled Foreign Corporations (CFCs)

Form 5471 filing requirements are closely tied to the concept of Controlled Foreign Corporations (CFCs).

A Controlled Foreign Corporation (CFC) is a specific type of foreign corporation subject to special tax rules in the United States. The primary characteristic of a CFC is that US shareholders hold a significant portion of its ownership or control.

Here are the key features of a Controlled Foreign Corporation.

• US Shareholder – A US shareholder is a US person (individual, corporation, or partnership) who owns 10% or more of the total combined voting power of all classes of stock entitled to vote in the foreign corporation. This includes constructive ownership rules, which can attribute stock ownership to certain family members or entities.
• Ownership by US Shareholders – A CFC is defined by the percentage of ownership held by US shareholders. Specifically, it is a foreign corporation in which more than 50% of the total combined voting power of all classes of stock or more than 50% of the total value of the stock is owned (directly, indirectly, or constructively) by US shareholders on any day during the corporation’s tax year.

Form 5471 Due Date

The due date for filing Form 5471 varies depending on whether the taxpayer is living in the US or abroad, as well as the type of tax return being filed (individual, corporation, partnership, etc.).

Individual Taxpayers

For individual taxpayers living in the US (including US citizens and resident aliens), the due date for filing Form 5471 is generally tied to the due date of their annual income tax return, which is April 15th of each year.

For Americans living abroad (including those with dual citizenship), the due date for filing Form 5471 is typically June 15^th, this extended two-month due date applies automatically without the need to file an extension request.

If an extension of time to file the income tax return is requested (using Form 4868), the due date for Form 5471 is extended along with the income tax return. The extended due date is October 15th.

Business Entities (Corporations, Partnerships, etc.)

For business entities (such as corporations or partnerships) that are required to file Form 5471 as part of their tax return, the due date varies depending on the type of entity and its fiscal year.

Corporations and partnerships with a calendar year-end typically have a due date of March 15th for filing their income tax returns (Form 1120, 1065, etc.). If Form 5471 is required, it must be submitted by March 15.

Like individual taxpayers, business entities can request an extension of time to file their income tax return, extending the due date for Form 5471. The extended due date is generally September 15th.

Penalties for Not Filing Form 5471

Failure to File Penalty

If a US person required to file Form 5471 fails to do so by the due date (including extensions), the IRS may impose a “failure to file” penalty. The penalty amount is determined based on when the form is filed:

• Initial Penalty: The initial penalty for not filing Form 5471 on time is $10,000 per form. This penalty is imposed for each annual accounting period of the foreign corporation.
• Continued Failure: If the failure to file continues for more than 90 days after the IRS issues a notice of failure to file, an additional penalty of $10,000 may be imposed for each 30-day period (or part of the period) after the 90-day period, up to a maximum of $50,000 per form.

Late Filing Penalty

If Form 5471 is filed after the due date (including extensions), the IRS may impose a separate penalty for late filing. The penalty amount is $10,000 per form, regardless of the reason for the delay. This penalty is in addition to any failure to file penalties that may apply.

Accuracy-Related Penalties

In addition to the failure to file penalty, the IRS may assess accuracy-related penalties if the information provided on Form 5471 is incomplete, inaccurate, or not in compliance with IRS regulations. The accuracy-related penalty can be up to 20% of the understatement of tax attributable to the inaccuracies.

Form 5471 Schedules and Requirements

Form 5471 is notorious for its many schedules. Depending on your category, you may be required to attach several of the following:

Step-by-Step Guide to Filing Form 5471

Filing Form 5471 is a rigorous process that requires coordination between foreign accounting standards and US tax regulations. Follow these six steps to ensure a complete and accurate filing.

Step 1: Determine Your Filing Category

Before opening the form, you must identify which “Filer Category” (1 through 5) you fall into. This is the most important step because your category determines which schedules you are legally required to complete.

• Direct vs. Indirect: Remember that ownership isn’t just what is in your name; it includes constructive ownership (shares held by family members or related entities).

• Thresholds: Most reporting is triggered at the 10% ownership level (Categories 2, 3, and 5) or the 50% control level (Category 4).

Step 2: Gather Financial and Organizational Data

You cannot complete Form 5471 with a simple bank statement. You need a full data set from the foreign corporation, including:

• Organizational Details: Legal name, Employer Identification Number (EIN) or Relevant Foreign Tax ID, and the date of incorporation.

• Financial Statements: A full Income Statement and Balance Sheet.

• The Functional Currency: Identify the currency in which the corporation conducts its primary business.

• Related-Party Records: Documentation of any loans, dividends, or property transfers between you and the corporation.

Step 3: Convert Data to US GAAP and Currency

This is where most taxpayers run into trouble. The IRS requires the corporation’s financials to be translated into US Dollars and adjusted to US Generally Accepted Accounting Principles (GAAP).

• Income Statement (Schedule C): Use the average exchange rate for the tax year.

• Balance Sheet (Schedule F): Use the spot rate (the exchange rate on the final day of the corporation’s tax year).

• Accounting Adjustments: If the foreign company uses IFRS or local standards, you must manually adjust entries (like depreciation or R&D costs) to match US tax law.

Step 4: Complete the Specific Schedules

Once your data is prepared, you must populate the specific schedules required for your category.

Step 5: File with Your Income Tax Return

Form 5471 is not a standalone filing. It must be attached to your primary US income tax return (Form 1040 for individuals, 1065 for partnerships, or 1120 for corporations).

• Due Date: It follows the deadline of your tax return, including any valid extensions (e.g., October 15th for individuals).

• Electronic Filing: Most tax software handles the attachment, but ensure the foreign entity section is correctly linked to avoid a failure to file rejection.

Step 6: Maintain a Permanent File

The statute of limitations for the IRS to audit a return containing Form 5471 remains open indefinitely if the form is filed incorrectly.

• Retain Records: Keep your translation worksheets (showing how you converted currency) and your GAAP adjustment notes for at least six years.

• Track E&P: Maintain a rolling log of Earnings and Profits (Schedule J), as this determines how future distributions will be taxed.

Tax Implications of Owning a Foreign Corporation as an American

Owning a foreign corporation as a US person comes with several important tax implications beyond filing Form 5471:

1. Subpart F Income
   If the foreign corporation is a Controlled Foreign Corporation (CFC), certain types of income—such as dividends, interest, rental income, insurance, offshore shipping, and personal service income—may be taxed immediately to US shareholders, even if not distributed. Ordinary business income from non-US operations is generally taxed only upon distribution. Dividends from treaty countries may qualify for reduced rates.

2. PFIC Rules
   A foreign corporation may be classified as a Passive Foreign Investment Company (PFIC), triggering complex tax rules, punitive tax treatment on distributions or sales of stock, and additional reporting via Form 8621.

3. Foreign Tax Credits (FTCs)
   US shareholders may claim FTCs for taxes paid to foreign jurisdictions, reducing double taxation on foreign income. Proper planning is essential to maximize credits and avoid errors.

4. Repatriation of Earnings
   Bringing foreign earnings to the US can trigger taxes under GILTI rules, which tax certain income from CFCs to prevent profit shifting. Planning is needed to minimize US tax exposure.

5. Estate and Gift Tax
   Ownership of a foreign corporation may affect US estate and gift taxes, as transfers to heirs or beneficiaries could trigger gift tax, and the value of foreign assets may be included in the estate.

6. Additional Reporting Requirements
   Beyond Form 5471, US shareholders must report foreign financial accounts (FBAR – FinCEN Form 114), specified foreign assets (Form 8938), and certain foreign transactions (Form 926).

What is the difference between Form 5471 and Form 5472?

Forms 5471 and 5472 are both used to report information about foreign corporations to the IRS, but they serve different purposes and apply to different situations for US taxpayers.

• Form 5471 is primarily for US persons (citizens, residents, and certain domestic entities) who are officers, directors, or shareholders in specific foreign corporations. It requires detailed information on the corporation’s financial activities, income, and ownership structure.
• Form 5472, on the other hand, is typically used by foreign-owned US corporations or US corporations with significant foreign ownership (at least 25%). This form is used to report certain transactions between the US corporation and its foreign-related parties, such as sales, purchases, and other transactions. The goal is to prevent profit shifting and ensure proper taxation of cross-border transactions.

In summary, Form 5471 is used to report US ownership in foreign corporations, while Form 5472 is used to report foreign ownership in US corporations. Both forms help the IRS track international business activities and prevent tax avoidance, but each targets different types of relationships and ownership.

What is the difference between Form 5471 and Form 8865?

Form 5471 and Form 8865 are both used for reporting interests in foreign entities, but they apply to different types of foreign business structures and different ownership situations.

• Form 5471 is used by US persons who are shareholders in foreign corporations, as discussed earlier. It focuses on foreign corporations and their owners who meet certain ownership thresholds, providing information about the foreign entity’s operations and financial status.
• Form 8865, on the other hand, is used by US persons who are involved with foreign partnerships. This form is required when a US person has a certain level of interest in a foreign partnership, generally 10% or more, or when there are certain types of transactions between the US person and the foreign partnership. It reports similar financial and ownership details, but specifically for partnerships rather than corporations.

In short, Form 5471 is for reporting foreign corporations, while Form 8865 is for reporting foreign partnerships, each with its own specific set of rules and filing requirements based on ownership and financial interests.