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.
