In December 2018, the IRS issued revised instructions to Form 8858, “Information Return of U.S. Persons With Respect to Foreign Disregarded Entities (FDEs) and Foreign Branches (FBs).”
The new instructions expanded the requirement to file this form to include the reporting of foreign branch operations of U.S. persons, controlled foreign corporations (CFCs) and controlled foreign partnerships. Previously, this requirement had applied only with respect to foreign disregarded entities.
Certain U.S. citizens and U.S. residents doing business abroad can have surprising tax reporting obligations as a consequence of this expanded requirement. The penalties for any missed (or late) Form 8858 reporting can be great, ranging from a $10,000 fine per missed form per tax year, to potentially losing the ability to claim foreign tax credits, to the potential imposition of criminal penalties in certain cases. Get the details here.