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The U.S. Internal Revenue Service (IRS) has issued proposed regulations altering the reporting requirements of certain disregarded entities that are wholly owned by a foreign person or a foreign entity. The regulations create reporting and record maintenance requirements for such entities similar to those that already apply to 25 percent-or-more foreign owned domestic corporations on IRS Form 5472. Once finalized, these proposed regulations would create a significant burden and raise privacy concerns but would assist the U.S. Treasury in providing reciprocal information automatically to foreign tax authorities under Model 1 FATCA intergovernmental agreements, tax information exchange agreements and tax treaties.
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