Delinquent information return procedures — is this a do-it-yourself job?
Some of it, yes — and we will say so on the call if that is the honest answer. The parts that are worth paying for are the ones where a missed election, a missed deadline or an unverified threshold costs more than the fee: the submission attaches a statement of reasonable cause to the late forms.
What if I have already filed and got it wrong?
That is a common starting point. We re-derive the position, identify whether an amendment or a disclosure route is the right vehicle, and tell you which one preserves the relief that is still available. The order matters more than the speed.
How long will it take?
It depends on the documents rather than on us. Once the pack is complete most filings turn around inside a fortnight; anything that needs a certificate from a tax authority runs on that authority's timetable, which we tell you at the start rather than at the end.
Why is the penalty larger than the tax on my foreign company?
Because information return penalties are not calculated on tax. They attach to the form, per form and per year, and they run whether or not the entity distributed anything or produced any income at all. A dormant company that never paid a dividend can therefore carry a larger exposure than a profitable one whose forms were filed on time. That is also why these omissions are worth correcting promptly rather than waiting to see whether anything is asked: the amount at stake grows with the number of forms and years, not with the size of the business.
What counts as reasonable cause for a late information return?
An explanation specific enough to be assessed. The submission attaches a statement to the late forms setting out how the omission came about: what the filer knew about the entity, who prepared the returns, what those preparers were asked and told, when the obligation was discovered and what happened immediately afterwards. Generalities about being busy or unaware carry very little. The statement's strength comes from dates, names of the advisers involved, and documents that existed at the time rather than descriptions written now, which is why the document-gathering comes before the drafting.
Can I just file the missing forms and say nothing?
Filing them bare leaves the penalty question entirely open and wastes the one opportunity to explain the omission at the moment it is noticed. The procedure exists precisely so that the late forms arrive with a reasonable-cause statement attached. Whether that statement succeeds depends on how specific it is and on whether there is unreported income sitting behind the omission. Both of those are worth establishing before anything is submitted, because the facts decide which route is open, and the route decides what the forms should be accompanied by.
What if there was unreported income behind the missed forms?
Then this is not the right procedure. The reasonable-cause route is built for filers who reported their income and missed only the information reporting. Where income from the foreign corporation, partnership or trust never reached the returns, the correction is a larger one and the forms travel with it rather than on their own. This is the first thing to test, and it is tested by reconciling each year's returns against the entity's own accounts, not by asking whether anything feels missing.
Does one statement cover several years of missing forms?
The forms are filed for each year they were due, and the statement has to explain the omission across the whole period, including why it continued once it had begun. A cause that plausibly explains the first year often explains the fourth much less well, and a statement that does not address that gap invites the question. Where the circumstances genuinely changed part way through, say so and date the change. The work is to build one coherent account of the whole run of years rather than repeat a paragraph six times.
Do I still have to file for a company that has been dormant for years?
Dormancy is not the test. The reporting obligation follows the interest you hold in the foreign corporation, partnership or trust, not whether it traded or distributed anything, which is why dormant holdings are the most commonly missed of all. A company kept alive abroad for a property, or a trust set up by a relative from which nothing has ever been received, both sit in this category. Establish what you hold and since when, then work out which years were reportable.
Do I need to report a foreign business I own?
Almost certainly, and on more than one form. Canada requires reporting of foreign affiliates on the T1134; the United States has a family of returns keyed to the entity type and your level of control, and several carry penalties that apply whether or not any tax is owed. These are information returns, so the obligation follows the ownership rather than the profit. See T1134.
Do I have to declare my dual citizenship?
A tax return does not generally ask you to declare which passports you hold; it asks about residence, and in the US case it applies to citizens by definition. What does ask is your bank. Account-opening self-certification under FATCA and the Common Reporting Standard asks which countries you are a tax resident or citizen of, and the answer is reported onward to the tax authority. So the practical answer is that the information arrives either way. See FATCA reporting.
