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International Compliance

International Tax Compliance

Resources for international taxpayers, foreign-owned businesses, expats, and U.S. persons with foreign financial interests. Educational content only — not tax or legal advice.

Articles in This Section

Form 5472 Penalties Foreign Reporting Requirements Overview FBAR Compliance Basics Expat Tax Issues

Form 5472 Penalties

Form 5472 is required for foreign-owned U.S. disregarded entities (including single-member LLCs) and U.S. corporations with 25%+ foreign ownership that have reportable transactions with related parties.

The penalty for failing to file or filing an incomplete Form 5472 is $25,000 per form per year. The IRS has significantly increased enforcement of this requirement in recent years.

The IRS may also assess continuation penalties of $25,000 for each 30-day period the form remains unfiled after notice.

Key Takeaways

Form 5472 is due with the entity's tax return (including extensions)

Foreign-owned single-member LLCs must file a proforma 1120 with Form 5472 attached

The base penalty is $25,000 — continuation penalties add $25,000 per 30 days

Even $0 transactions may require Form 5472 if the entity has reportable activity

Late filing relief may be available through reasonable cause procedures

Foreign Reporting Requirements Overview

U.S. taxpayers with foreign financial interests face a complex set of reporting requirements, including FBAR (FinCEN Form 114), Form 8938 (FATCA), and various information returns for foreign entities and investments.

Failure to comply with foreign reporting requirements can result in substantial civil penalties — ranging from $10,000 per violation for non-willful FBAR violations to $100,000+ for willful violations.

The IRS has expanded its international compliance programs and international information exchange agreements significantly.

Key Takeaways

FBAR is required for accounts exceeding $10,000 at any point during the year

FBAR is due April 15 with an automatic extension to October 15

Form 8938 thresholds vary based on filing status and residency

Foreign entity ownership may trigger Form 5471, 8865, or other returns

The IRS Streamlined Filing Compliance Procedures may be available for non-willful violations

FBAR Compliance Basics

The Foreign Bank Account Report (FBAR) — FinCEN Form 114 — must be filed by U.S. persons with a financial interest in or signature authority over foreign financial accounts if the aggregate value exceeds $10,000 at any point during the calendar year.

FBAR penalties for non-willful violations can be up to $10,000 per violation per year. Willful FBAR violations carry penalties of up to the greater of $100,000 or 50% of the account balance per year.

The IRS has voluntary compliance programs available for taxpayers who are not currently under examination.

Key Takeaways

FBAR is filed electronically through FinCEN — not with your tax return

All accounts are aggregated to determine the $10,000 threshold

Joint accounts count toward each account holder's threshold

Non-willful penalty abatement may be available through the First-Time Abatement program

Consult a tax professional before participating in any voluntary disclosure program

Expat Tax Issues

U.S. citizens and residents living abroad are still required to file U.S. tax returns and pay U.S. taxes on worldwide income. This remains true regardless of whether foreign income taxes are also paid.

Expats may be eligible for the Foreign Earned Income Exclusion (FEIE), Foreign Tax Credits, or both to offset U.S. tax liability. These are claimed on Form 2555 (FEIE) and Form 1116 (Foreign Tax Credit).

Expats are also subject to FBAR and FATCA reporting requirements for foreign financial accounts and assets.

Key Takeaways

U.S. citizens and Green Card holders must file U.S. returns while living abroad

The FEIE can exclude up to $126,500 (2024) of foreign earned income

Foreign Tax Credits can reduce double taxation on the same income

FBAR filing is required for accounts exceeding $10,000 at any point in the year

Late filers may use the IRS Streamlined Foreign Offshore Procedures if certain requirements are met

Hive Tax Book

International Tax Compliance Support

Hive Tax Protection™ includes access to professionals experienced with international reporting requirements and foreign-owned entities.

Explore Protection Plans View Form 5472 Review

Frequently Asked Questions

Does a foreign-owned LLC always need to file Form 5472?

A foreign-owned single-member LLC that is a disregarded entity must file Form 5472 if it has any reportable transactions. Even in years with minimal activity, filing may still be required.

What is the IRS Streamlined Filing Compliance Procedure?

The Streamlined Procedures allow non-willful violators of foreign reporting requirements to come into compliance with reduced penalties. Separate programs exist for U.S. residents and non-residents.

Related Resources

Form 5472 Compliance Review Foreign-Owned LLC Checklist Hive Tax Protection™ Plans Global Remote Tax Intelligence

Educational content only. Not tax or legal advice. International tax situations are highly fact-specific — always consult a qualified international tax professional.