Fill Form 8865 Facilities 2023-2024

Hello Anthony, hello Claudia. We're here today to talk about a case involving Mr. Dewey's. He was a taxpayer who successfully beat the FBAR penalty but was heavily hit by the Form 5471 penalty, amounting to $120,000. This case is quite interesting because the IRS rarely uses Form 5471, which is a complicated form required for individuals who own an interest in a foreign corporation. The form originated from two laws in 1962 and 1970, meant to be imposed on large multinational corporations. Unfortunately, smaller individuals like Mr. Dewey's, who was a consultant in Canada under a Canadian corporation, often get caught in the IRS's radar due to this form. If he had conducted his consulting work solely under his own name, without involving a Canadian corporation, he wouldn't have been subject to the Form 5471 requirement or the associated penalty. In fact, there would have been no additional tax due or any penalties at all. The Form 5471 is considered a delinquent informational return, commonly known as a "derf." Many other derfs exist for different entities such as corporations, partnerships, trusts, gifts, and foreign pensions. These derfs require a significant amount of reporting, and the information often goes untouched by the IRS, leading many to question their purpose. It appears that the IRS is targeting average individuals rather than high-profile cases, such as the apprehension of terrorists. Mr. Dewey's, as a consultant, can be considered an average Joe rather than a major player. However, some may argue that Mr. Dewey's should have made an initial disclosure to the IRS. The reason he even knew about the missing forms was because he entered into a voluntary disclosure program in 2009. Ironically, if he had chosen to remain under the radar or waited until 2014 to make a streamlined disclosure, he...