What happens if I never filed forms for my foreign company?
The reporting obligation sits separately from the tax return, so the income can have been declared while the annual information return for the company was never filed at all. Penalties on those forms are charged per form and per year, which is why the exposure on a company that never made a profit can be larger than any tax that was ever at stake. The procedure for delinquent information returns is to file the outstanding forms and attach a statement of reasonable cause to them. Whether that succeeds turns on how specific the explanation is, and on there being no unreported income sitting behind the omission.
Can I file late information returns and still get relief?
There is no automatic waiver for a late information return. The route is a request: the missing forms go in with a statement of reasonable cause attached, and the request is decided on what that statement contains. Two things carry most of the weight. The first is specificity, meaning what happened, in what order, and with what evidence behind it. The second is whether the income connected to the foreign entity was reported. Where it was, the omission is a filing failure and nothing more, and that is the case the statement has to make on the face of the papers.
Does it help that I reported all the income?
It is close to decisive. The delinquent information return route is built for filers who paid what they owed and missed a form, and the absence of unreported income behind the omission is one of the two things the outcome turns on. So the first piece of work is not drafting. It is checking the returns for the years in question against the foreign entity's own accounts, to be sure the income really was picked up. If it was not, this is the wrong route, and discovering that after the forms have gone in is far worse than discovering it first.
What explanation do I attach to late information returns?
A dated account of why the form was not filed, rather than a request for sympathy. Causes that can be evidenced include an adviser who prepared the personal return for years without ever asking whether a foreign company or trust interest existed, a structure inherited or set up abroad before the filer moved, and a change of adviser at which the obligation finally surfaced. Each of those can be supported with correspondence and engagement records. Generic wording, that the filer was unaware of the requirement, gives the reader nothing to test, and specificity is what this submission lives or dies on.
How many years of missing foreign entity forms should I file?
Before anything is drafted, the list is written out: which years carried the obligation, which forms each of those years required, and whether the income behind them appeared on the return. That list, not the tax, sets the size of the problem, because the penalty is charged per form rather than on an amount owed. It also decides the shape of the submission. A single cause running through every year reads quite differently from a cause that started and stopped partway through, and the statement has to match the years it actually covers.
Can I use this procedure for a trust I forgot about?
The procedure is not limited to companies. Interests in foreign partnerships and trusts carry their own annual returns, and those are among the filings that most often go unmade, because the holder does not think of a trust as something that files. The test is the same one: the outstanding returns go in with a reasonable-cause statement, and the position is far stronger where the income and distributions connected to the trust were already on the personal return. A trust also raises a question of fact worth settling early, which is who actually held the reportable interest in each year.
Do I pay US tax on an inheritance from abroad?
A bequest is not income, so the receipt itself is not taxed. Reporting is a different matter: a US person who receives large gifts or bequests from a foreign person or estate files an information return for the year, and inheriting a foreign account or an interest in a foreign trust brings the account and asset reports with it. The penalties here attach to the information return, not to tax — which is why people who owed nothing still get letters. See Form 3520.
Do US citizens abroad have to report foreign bank accounts?
Yes, and under two separate regimes with different thresholds and different filing homes — one report to FinCEN covering foreign financial accounts, and one to the IRS with the return covering a broader class of foreign assets. Both are keyed to balances rather than income, so an account earning nothing can still require reporting, and each carries penalties of its own. See filing both.
