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Discussion Starter · #1 ·
Back in 2017, American husband and green card holder wife, returned to wife's home country and started a small business. The business is structured as a corporation. Next year, in 2018 wife surrendered the green card (held more than 8 years). She did not fill out form 8854. In 2019 we became aware of form 8854, and filed it late via FAQ#24.

Relief Procedures for Certain Former Citizens | Internal Revenue Service

This year (2021) we have become aware of form 5471, which apparently needed to be filed all this time up through the green card surrender for the wife, and continuing for the husband.

Does the fact that we did not file 5471's mean that wife was not in full tax compliance at the time of the green card surrender? The business has not yet turned profitable, there is no additional tax liability resulting from it.

We are thinking about doing the Offshore Streamlined Compliance and amending old tax filings with the 5471's, but we are afraid. Afraid that once we do this, we will be scrutinized. Afraid to be declared a covered expatriate because of all of this. The 5471 is very burdensome, I've never prepared something like this before...

Do you guys have any advice?
 

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As far as I understand it, the offshore streamlined program is only available for those who were unaware of their filing obligations and had filed nothing - it's not available for anyone who needs to amend returns. So I don't think you could use it to file missing 5471 forms.

My general advice would be to just forget about the IRS and ignore them, but if you are a US citizen only and/or if you have US assets or plans to return, then you need to tread more carefully. I won't make any predictions on the subject of filing late 5471 forms.

Covered expatriate status only applies to someone who has renounced, so it's not relevant to you as a US citizen. Frankly it seems to be meaningless. Everyone's afraid of it but nobody seems to know what if any consequences it might entail.

PS Interesting that you used FAQ #24 to file a late 8854 for your wife. As I read it, that whole set of procedures is intended for those who relinquish US citizenship, not green cards. But if it worked, all good. Shows you how much attention the IRS pays to this stuff.
 

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expat_burden -- You are now in CFC (Controlled Foreign Corporation) territory. From my point of view I would divest ownership personally and put the corporation in my wife's name. The ownership threshold for CFC reporting is 10%, so you can maintain 9.9%, if you were so inclined , and eliminate any reporting requirement.

Personally, I would "let sleeping dogs lie," as to your past 5471 filing requirement (assuming you transferred your shares to your wife.) As an NRA, your wife would no longer have a U.S. filing requirement. Cheers, 255
 

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Discussion Starter · #4 ·
Thanks for the advice guys. It is gut-wrenchingly overwhelming to face this alone. Thank you for being there.
 

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Don't back file 5471 forms "naked", meaning without using some procedure like streamlined compliance. You will get slapped with an automated $10k fine per year. Consult with a tax lawyer or some very good accountant if you decide to file. In your case I would recommend researching into streamlined compliance for the sake of the husband. Don't worry about the wife, she's should no longer be worried and I wouldn't back file anything under her name.
 

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I would confirm this, but as I understand it the streamlined program can't be used for "partial non-compliance" - i.e. someone who's been filing returns but has missed a particular form, such as 5471. Streamlined is intended for someone who was completely unaware of all US tax obligations and hasn't filed anything at all.

I think the earlier advice given - get out of the company, file nothing and pretend it never happened - is very sound.
 
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