Two Important New International Tax Filings

While not the only international reporting changes that are occurring, there are two significant ones that apply for the current filing season for 2016 returns.

First is the FBAR, which reports interests in foreign accounts. This used to be due on June 30, but is now due by April 18.

Second is the expansion of Form 5472 reporting - now to nonresidents with interests in U.S. single member limited liability companies that are otherwise treated as disregarded entities and that have transactions between the LLC and related people. Such LLCs are now treated as a domestic corporation for purposes of Section 6038A and Form 5472 reporting. Treas. Regs. §1.6038A-1(c)(1)’ Treas. Regs. §301.7701-(a)(2)(vi).

De minimis transfers of assets to or from such an LLC can trigger the reporting. The safe harbor de minimis reporting exceptions applicable to Form 5472 do NOT apply to this single member LLCs. Treas. Regs. §1.6038A-1(i)(1); T.D. 9796 (January 17, 2017). Thus it is likely that single member LLCs used in a U.S. real property holding structure with foreign owners (including foreign trusts) will be subject to this reporting.