Owners of US disregarded entities: The due date for 2017 compliance is fast approaching

Link: https://www.frankhirth.com/news/owners-of-us-disregarded-entities-the-due-date-for-2017-compliance-is-fast-
Iain Younger: https://www.frankhirth.com/staff/iain-younger
Phone: +44 (0) 20 7833 3500
Date: Fri, March 09, 2018

The Form 5472 filing obligation, newly introduced for the 2017 calendar year, requires disclosure to the IRS of US disregarded entities by foreign persons. This includes non-US individuals, trusts and corporations.

See our original guidance from January 2018

This reporting requirement is very broad, with no minimal filing thresholds. However, failure to file in a timely manner can give rise to a minimum penalty of $10,000 per failure. Additional penalties may also be imposed.

The reporting requirement only relates to non-US owners of the US disregarded entities, which will commonly be a single member US LLC. However, the filing obligation is not dependent on any US source income being generated by, or US situs assets being held within, the US disregarded entity.

There will be practical steps that need to be taken, such as obtaining a US identifying number, to enable timely filing of Form 5742.

Action should be taken now to ensure that any potential filing obligation is understood and any required filings can be submitted in a timely manner.

If any assistance is required for this compliance, we would be very happy to discuss further.

This article has been written for the general interest of our clients and contacts to stimulate further thought and enquiry. It does not contain answers to specific situations and it is therefore essential to treat it as a prompt to take specific advice on any real and particular issues. We believe that the facts as summarised in this article are correct as at the time of going to press in March 2018. If we discover that the article might be read in a way that conveys a misleading impression (whether by tone, content, error or omission) we will make the necessary changes and draw attention to what has been changed once we become aware of the need to do so. We will not be responsible for any action taken by a reader who relies on the article but does not seek further advice to answer any specific query.

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