Written on behalf of Feigenbaum Consulting
The IRS Large Business and International Division (“LBI”) is taking steps to, “redefine large business compliance work and build a supportive infrastructure inside [LBI],” through a series of campaigns aimed at resolving areas of compliance risk. Some of these campaigns will target cross-border businesses, including the Form 1120-F Non-Filer Campaign.
What is the Form 1120-F Non-Filer Campaign?
Any foreign company that is involved in US business or trade must file a US tax return, regardless of whether it has any income associated with that US business. As part of an initiative to increase compliance, the LBI is attempting to encourage non-US entities to meet this requirement on a voluntary basis.
The LBI will use data from various government and state records to identify companies that engage in any US trade or business. If they cannot find any records on file with the IRS for a company doing US business, they will actively explore whether any available information indicates an obligation on the part of the company to file a US return.
If a foreign company looks like it should be filing a US tax return, the LBI will write to the company to ask whether it is aware of the requirement. Although this is an informal communication, companies are expected to respond promptly, either submit the missing returns, or by replying to the IRS with an explanation as to why they have not filed.
If LBI is not satisfied with the response provided, they may choose to take further action, up to and including an examination to determine the company’s actual tax liability.
Tax advice for companies operating in the United States
Companies should take proactive steps to review those areas of their business which may be targeted by these initiatives. The lawyers at Feigenbaum Tax Law can advise you about whether your business may be impacted by this campaign, and help you take any steps necessary to bring your company in to compliance.
Our cross-border tax specialists can help you determine if your business could be targeted by the Form 1120-F Non-Filer Campaign, or any other of these LBI initiatives. To make an appointment to speak with a member of our team, contact us online, or call our office toll free at (877) 275-4792.