What is included in the fee for 1120-f / 5472 filing?
The foreign corporation's US return with the related-party information reporting, filed on time so deductions and treaty positions are preserved rather than argued for.
What would make 1120-f / 5472 filing cost more than the standard tier?
Dormancy is not a discount. A foreign-owned US entity with no activity still owes the information return, and the penalty for missing it does not scale with turnover.
Is the fee really fixed?
Yes, for the scope quoted. If the scope changes — another year appears, an entity turns up, a certificate becomes necessary — we re-quote before doing the work, so there is never an invoice you have not already agreed to.
Does my Canadian company need to file 1120-F if it made no US profit?
Usually yes, and the reason is the treaty rather than the profit. If the company has US-source business income but no permanent establishment there, the treaty exempts the profit, but that exemption is a position which has to be claimed on a return and disclosed, not something that applies silently. Filing also protects the deductions against that income, which can be denied where the return goes in late. A return filed on that basis reports the activity, claims the treaty position, and leaves nothing to tax. Not filing leaves you arguing for the same result after the fact, with less to argue from.
What is Form 5472 and does our US subsidiary have to file one?
It is an information return about transactions between a US entity and its foreign related parties, filed with the entity's own return rather than instead of it. The trigger is ownership and dealings rather than profit: a US corporation with a substantial foreign owner, or a foreign-owned entity disregarded for US purposes, reports the loans, sales, services, royalties and expense allocations that passed between it and the related party during the year. The practical difficulty is rarely the form itself. It is that intercompany items sit in the ledger as balances and have to be traced back to the transactions that created them.
How much does it cost to file 1120-F and 5472 for a first year?
The fee is fixed in writing before any work starts, and it is priced from your own records rather than from a description of them. What moves it is the state of the intercompany information: a company with clear agreements, a trial balance that separates related-party items, and a settled picture of where the work was performed sits at the straightforward end. A first year with balances that have accumulated without documentation takes longer, and the quote will say so. If the scope changes once the records are in front of us, we re-quote before continuing rather than afterwards.
We have missed several years of 1120-F filings, what happens now?
There are two distinct exposures and they are worth separating before anything is prepared. The information return carries its own penalty regime, assessed per return and per related party rather than by reference to tax owed, so it can bite even where the company owed nothing. Separately, a late return can cost the deductions against US-source income, which turns a modest taxable figure into a much larger one. The work is to establish which years were actually required, prepare them in sequence with the intercompany position documented, and put the reason for the delay in writing where that matters.
Do we need a US tax number before we can file?
Yes, and it is the step most likely to delay a first filing. The corporation needs its own US taxpayer identification number, applied for separately, and the application asks for details about the entity and a responsible person that take time to assemble when the parent sits overseas. It is not something to leave until the return is drafted. Where an engagement includes a first-year filing, the number is dealt with first and the rest is worked back from the filing date, because the return cannot go in without it and the application is outside our control once it has been submitted.
Is the treaty position included, or is that quoted separately?
It is part of the engagement rather than an extra. The point of the return in most cross-border cases is the position taken on it, so quoting for the form and treating the analysis as additional would be quoting for the wrong thing. What is quoted separately is work of a different kind: an advance application to a tax authority, a second jurisdiction's filings, or reconstructing records that do not yet exist. Those are named in the quote where they are in scope. Anything that emerges afterwards is re-quoted before it is started, in writing, and you decide whether it goes ahead.
How is a US LLC taxed for a Canadian owner?
This is the classic hybrid mismatch. The United States generally treats a single-member LLC as transparent and taxes the member on the profit as it arises. Canada treats the LLC as a corporation and taxes the member on distributions. So the two countries tax different amounts in different years, and the foreign tax credit — which needs the same income taxed by both in the same year — often cannot bridge it. The treaty relief for hybrids is narrow. See why a Canadian should rarely own an LLC.
What is a PFIC, and why do Canadian mutual funds cause trouble for US persons?
A passive foreign investment company is a non-US company that is mostly passive by income or by assets — which describes almost every Canadian mutual fund and ETF. For a US owner the default regime taxes distributions and gains punitively with an interest charge for the years the value built up. Two elections fix it, and both need annual information the fund may not produce for you. Holding the same exposure through US-domiciled funds usually avoids the problem entirely. See PFICs and Canadian mutual funds.
