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Just had a long conversation with a friend here who is in the midst of a real difficulty with the IRS. He and a few partners purchased land, later sold and then purchased a home for rental purposes. Between he and the partners, they had about eight U.S. attorneys and accountants. None were aware of the form 5471 (I believe that is the number) that is required to be filed for persons owning a foreign corporation. Now all partners are filing amended returns and scrambling to avoid some really dreadful penalties (the transactions happened about three years ago).
We did file the form when we opened our Costa Rican corporation early last year and will do so again to show the change from “active” to “inactive”. Our U.S. accountant will no longer file our returns as we are now here and I am seeking a good accountant here who can help us with our tax return for the U.S. Otherwise, our return is fairly simple. Can anyone recommend a reliable accountant here who will execute our returns??
[quote=”sueandchris”] Otherwise, our return is fairly simple. Can anyone recommend a reliable accountant here who will execute our returns??[/quote]
Why not file it yourself using the online services? Turbotax is highly rated by Consumer Reports. About $80 and it’s all done online. State and Federal.
Boy! You’ve got that right! TurboTax makes it really easy. You can submit the 5471 via the Correo. It doesn’t have to be submitted with your tax return.
Turbo Tax is the tax idiots’ dream come true. i had never prepared a tax return in my entire life, but two years ago i filed my first return online with TT because i couldn’t get back to the States in time. It took me less than one hour to do the whole thing, and trust me, if i can do it, anyone can do it. it’s completely idiot proof.
Huh! Would love to use on-line, but have two Schedule C forms (the last ones) that will also need to be submitted with this return. So would like to use a local U.S. accountant for this one last return and then can file ourselves.
David…..say more about the 5471 being filed apart from the tax return. We were given to believe that they needed to be filed at the same time………
Sue, Marcia sez I’m confusing the 5471 with the form about foreign bank accounts with balances greater than $10,000.
Still, I’d look at TurboTax to see if it can’t produce both the 5471 and Schedule C.
You don’t pay for TurboTax until it’s time to either e-file your return or print it to mail in, so there’s no financial risk.
In case you missed this…
Second Special Voluntary Disclosure Initiative Opens; Those Hiding Assets Offshore Face Aug. 31 deadline
WASHINGTON — The Internal Revenue Service announced today a special voluntary disclosure initiative designed to bring offshore money back into the U.S. tax system and help people with undisclosed income from hidden offshore accounts get current with their taxes. The new voluntary disclosure initiative will be available through Aug. 31, 2011.
“As we continue to amass more information and pursue more people internationally, the risk to individuals hiding assets offshore is increasing,” said IRS Commissioner Doug Shulman. “This new effort gives those hiding money in foreign accounts a tough, fair way to resolve their tax problems once and for all. And it gives people a chance to come in before we find them.”
See more at:
[ http://www.irs.gov/newsroom/article/0,,id=235695,00.html?portlet=7 ]
[quote=”sueandchris”]Huh! Would love to use on-line, but have two Schedule C forms (the last ones) that will also need to be submitted with this return. So would like to use a local U.S. accountant for this one last return and then can file ourselves.
David…..say more about the 5471 being filed apart from the tax return. We were given to believe that they needed to be filed at the same time………[/quote]
Hi Sue, I have been using Randalll Lindner in Escazu He is great and his phone number is 2288 2201. Ron USCG RetBased on the confusion about 5471 I called my tax accountant in the states (who did our last return WITH the 5471) and basically grovelled and begged until he agreed to again do this year’s taxes. We are making a trip back in March and he will have everything prepared to sign then.
We now have a SECOND corporation that holds our car and cellphones, so will be interesting to see if this requires a whole new 5471 or just an addition to the first form.
What a royal pain in the arse!!
[quote=”rfalves”][quote=”sueandchris”]Huh! Would love to use on-line, but have two Schedule C forms (the last ones) that will also need to be submitted with this return. So would like to use a local U.S. accountant for this one last return and then can file ourselves.
David…..say more about the 5471 being filed apart from the tax return. We were given to believe that they needed to be filed at the same time………[/quote]
Hi Sue, I have been using Randalll Lindner in Escazu He is great and his phone number is 2288 2201. Ron USCG Ret[/quote]We used Mr. Lindner for our 5471 filing. He emailed the forms to us in the States, which we handed over to our local tax prep guy. He did it in a timely manner, and we were happy with the results. We “found” him when he spoke at the ARCR seminar.
An update: We took the pertinent information regarding our Costa Rican corporation back to the states and had a new tax preparer there do our taxes. This was the last year for a business-related Schedule C, so next year will be much simpler. Now that I have this year’s 5471, I believe I can just submit this myself next year and use the regular forms for the rest of our reporting. (Unless something changes in the status of our corporation.)
NOTE: If you are submitting a 5471, all of your forms must be SENT by regular mail to the IRS, not submitted by email. Our new tax person pointed this out. However, we still got our refund very quickly!
We bought our home two years ago. WeloveCostaRica.com had a guest U.S. tax attorney who wrote about the IRS Form 5471. I prepared our IRS 1040 Form using TaxAct, I also downloaded and prepared IRS Form 5471, which I attached to my IRS Form 1040. I followed the exact instructions provided by the WeLoveCostaRica.com guest tax attorney. I also claimed the Costa Rican property tax deduction, on my 1040. I have not had any issues with the IRS, in terms of the CR property tax deduction. I maintain less than $10,000 in our CR bank, thus, I do not have to file the additional form with the IRS and The Treasury.
Yeah, we’ve used TurboTax for several years. Where it prompts you for your state of residence, we opt for “foreign”. And IRS has never quibbled with us about deducting either our Costa Rican property taxes or our mortgage interest. Interestingly, [i]Banco HSBC[/i] does not report our mortgage interest to IRS but it’s never been a problem.
Interestingly, [i]Banco HSBC[/i] does not report our mortgage interest to IRS but it’s never been a problem.[/quote]
Does anyone know exactly what the banks here report to the IRS?
It appears the prison bars extend far beyond the national borders. Paying for professional accountants who may or may not understand well enough how to comply with the myriad of tax laws is also no guarantee of avoiding serious problems. In the end, it doesn’t matter how much or how little effort one makes to comply, if THEY decide to persecute you, they will find a way.
The IRS has a 98% win ratio in court because they maintain a body of professional “jurors” who find in favor of the government nearly all the time regardless of the merits of the defendants. They also have an unlimited legal budget at their disposal. The best one can hope for is to remain under the radar. I am just guessing here, but ANY wealth kept overseas may be a red flag for these people. It makes me wonder if full compliance, if that is even possible, just makes it easier for persecution.
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