What is the late filing penalty for Form 926?

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Answer

Reports a US person's transfer of property — cash, shares, intangibles — to a foreign corporation. The exposure on this kind of filing is charged by reference to the form and the delay rather than to the tax, which is why an unfiled year with no tax can still be expensive.

What a late filing costs

Reports a US person's transfer of property — cash, shares, intangibles — to a foreign corporation.

The team reviewing a file together at a desk

Where the general answer is wrong

Capitalising the foreign company you just set up is a reportable transfer. It is one of the quietest filings in the international set, and its penalty is computed as a percentage of the value transferred.

What is the late filing penalty for Form 926?
ItemAmount
Current account, highest balanceUS$9,000
Savings account, highest balanceUS$5,000
Account held with a relative, signature authority onlyUS$4,000
Aggregate tested against the thresholdUS$18,000
Reporting threshold (verified, FinCEN)US$10,000

The aggregate of US$18,000 exceeds the US$10,000 threshold, so all three accounts are reported — including the one that is not the filer's money, because signature authority counts.

The figures here are an illustration, not an engagement: amounts are picked so the mechanism is easy to follow, and every rate or threshold is an assumption of the example. Before anything is filed for you, each one is confirmed with the issuing authority for your own tax year.

Where to go from here

The full treatment — who it binds, the deadline, the penalty and the fixed fee — is on 926 — transfers to a foreign corporation. If that describes your position, the next step is a short call — not a form.

Reviewed for accuracy for the 2025 and 2026 filing seasons by Udit Gupta, Cross-Border Tax Expert, Legal Quotient Consultants. Published as general information. For a position on your own file, call the 24-hour helpline.

Penalty for not declaring foreign bank account — what this page covers

The subject here is Form 926, which is what people mean when they search for penalty for not declaring foreign bank account. This page covers who it applies to, the filings it produces, and the fixed fee agreed before work begins.

Cross-border situations we are engaged for

Case study 1

Valuing a share contribution years after it was made

The transfer had happened long before anyone asked about reporting, and it was shares in a private company rather than cash. Because the exposure on a late filing is measured against the value transferred, the valuation was the engagement. We assembled the contemporaneous evidence, including the accounts, the shareholders' agreement and the funding round that followed, and set out a basis for the figure as at the transfer date rather than as at today. The work produced a written valuation memorandum, the late form prepared on that figure, and a file that explains the reasoning to whoever reads it next.

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Case study 2

Amending several years so the contribution schedule agrees

A client had funded their company in tranches across several years and had filed returns for all of them with nothing attached. Preparing one year at a time would have meant revisiting the earlier ones, so we built the whole contribution history first and then prepared the amendments as a set. Each year's form referred to the same schedule and the same valuation basis. The engagement produced amended returns for the open years with the reporting attached, and a single contribution schedule that ties them together and can be handed to anyone who asks.

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Case study 3

Building the reasonable cause record before filing anything

The client's instinct was to file at once and explain afterwards. We slowed that down. The engagement began with the documentary history: who had advised on the incorporation abroad, what that adviser's scope covered, what the client was told, and when they learned otherwise. Only then did the filing go in, accompanied by a statement of facts a reviewer can check against the correspondence. What the work produced was a filed late form and a written record of the events supporting the relief position, assembled from documents rather than from recollection.

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Case study 4

Separating reportable contributions from genuine loans in arrears

Years of transfers into a foreign company had never been characterised, and treating all of them as contributions would have overstated the value the exposure is measured against. We worked through the company's local accounts and resolutions, identified which advances had been recorded as debt at the time, and reported only the tranches that were capital. The engagement produced a characterisation schedule supported by the company's own records, late forms limited to the reportable tranches, and loan documents put in place for the balance going forward.

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Case study 5

Reporting a late intangible transfer after a funding round

The omission surfaced when an investor's advisers asked what the company owned and how it had acquired it. That changed the order of the work, because the diligence file already held most of the evidence about what had been contributed at formation. We used it rather than starting again, identified the assets that had moved, fixed the transfer date from the development and contract history, and prepared the reporting on a value consistent with what the company had told its investors. The output was a late filing that does not contradict the diligence record.

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Case study 6

Closing a dormant foreign company without leaving the reporting open

A client wanted to wind up a company abroad that had never traded, and assumed the reporting would disappear with it. The contribution made at formation remained reportable, and a dissolved company is a harder place to find records than a live one. We sequenced the work the other way round: contribution history and valuation support first, the late filing next, then the wind-up. The engagement produced the completed reporting for the funding year and a document pack retained after dissolution, so that year can still be explained once the company no longer exists.

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Case study 7

Years Filed Quietly, and What That Cost

Posting missing returns without taking a view on the route gives up the certification-based protection and can itself be read as an indicator. The first task on these files is mapping which years remain eligible for which route.

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Case study 8

Documentation Requested, and the Deadline Is Not Extendable

Contemporaneous documentation has to exist by the filing deadline, not be assembled when it is asked for, and the penalty protection turns on that timing. The engagement produces the analysis for the year in question and puts a repeatable process behind the next one.

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All case studies — every published engagement in one place.

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The follow-up questions on Form 926

What happens if I filed Form 926 years late?

The cost of being late here is tied to the size of what you transferred, because the penalty on this form is computed as a percentage of the value transferred rather than as a flat sum or a share of tax owing. That is the feature which surprises people: a year with no tax to pay, in a company that never traded, can still carry real exposure because a large contribution went in. So the first work on a late filing is the valuation and documentation of each transfer, not the form itself. Establish what moved, on what date, and what supports the figure. The filing and any request for relief can then be built on something a reviewer can follow.

How is the late penalty on Form 926 worked out?

By reference to the value that went into the company. The charge runs off the value transferred, which means the arithmetic is driven by your contribution rather than by profit or tax. Two consequences follow. A cash funding is usually simple to evidence and therefore simple to compute. A transfer of shares or intangibles is not: the value has to be established on a defensible basis, and that figure is the one the exposure is measured against, so nobody should be guessing at it. We deal with the valuation support first and treat the form as the output of that work rather than the start of it.

Can I attach a late Form 926 to an amended return?

That is usually the route, and the sequence matters more than the form. The reporting belongs with the return for the year of the transfer, so a filing made now generally goes in with an amendment for that year rather than being posted on its own. Where several years are involved they are prepared as a set, so the contribution schedule reads consistently across all of them. Filing one year in isolation and then discovering that the next year changes the first is the common self-inflicted problem. Agree the scope and the fixed fee in writing before the work starts, then file the years in order.

Does reasonable cause help with a late Form 926?

It can, and how you present it is most of the work. Relief arguments turn on the actual sequence of events: when the company was formed, who advised on it, what the client was told about reporting, and what they did when they found out. That is a documentary exercise. The weakest version is an assertion that nobody mentioned it. The stronger version sets out the record — engagement letters, correspondence, the local adviser's scope — and lets a reviewer see why the omission was reasonable. Assemble that material before filing rather than after a notice arrives, because the file you build calmly is better than the one you build against a deadline.

I sold the foreign company before I knew about Form 926 — what now?

Disposing of the company does not undo the reporting for the year you funded it. The obligation arose on the transfer, so a later sale changes what else you have to report but not whether that earlier contribution was reportable. In practice a sale makes the work easier in one respect and harder in another: the transaction documents often contain the valuation evidence for what went in, and the buyer's due diligence may already have gathered it, but the records now sit with people who no longer take your calls. Start from what you still hold, then rebuild the contribution history from the company's filings in its own jurisdiction.

Is it better to file Form 926 late than not at all?

Filing is nearly always the better position, and the reason is about where you stand rather than about arithmetic. An unfiled year is an open question that somebody else gets to raise at a time of their choosing, with the exposure measured against the value you transferred whatever your intentions were. A late filing, prepared with the valuation support and an account of why it is late, puts the facts on the record in your own words. It also stops the practical problem growing: each further year of silence makes the records harder to rebuild and the explanation harder to make.

Does GILTI apply to individuals?

Yes, and it lands harder on them. An individual US shareholder of a controlled foreign corporation has the same inclusion a corporate shareholder does, but without an election gets neither the corporate-level deduction nor credit for the foreign corporate tax already paid — so foreign profit can be taxed at individual rates with no relief for tax the company paid abroad. An election to be taxed as though through a domestic corporation is usually the first thing to model. See Form 5471 and CFCs.

Does a foreign-owned US entity need an EIN?

Yes, for almost anything it must do: file its returns, operate payroll, open a bank account, and act as a withholding agent on payments abroad. It is applied for on Form SS-4, and the part that stalls foreign owners is the responsible party — a real person with a US identification number is expected, and where none exists the application route and the supporting explanation both change. It is worth starting early because downstream registrations queue behind it. See EIN applications.

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