Extract
TEI member comments on Form 5471: July 2007.
Note: These comments are a compilation of recommendations received from TEI's members on Form 5471.
After the June 6th meeting with the IRS, TEI circulated 13 questions among the members of its IRS Administrative Affairs and International Tax Committees, soliciting their views on issues relating to the Form 5471 and possible modifications. Many of the questions were drawn from issues discussed during the June 6th meeting. In addition, in its monthly email to members, TEI asked generally about issues relating to the form and possible modifications. Although the responding group is relatively small (17), the data they provided are extensive. The information provided by each respondent is enclosed. Specifically, TEI asked its committee members the following questions: 1. What processes do companies have in place to collect data and prepare and review the form? Specifically, (a) do internal company management reporting systems support Form 5471 reporting; (b) how and in what format do companies assemble key Form 5471 information; (c) how (if at all) is Form 5471 data used for internal reporting; and (d) what processes are in place to ensure timely and accurate filing? 2. What specific problems have companies identified in either their data collection or form preparation? 3. What changes should be made to provide relevant information to the IRS without unduly burdening companies? 4. What questions, if any, have you received from your IRS examiner about Form 5471? The IRS expressed interest in questions about Schedule F (Balance Sheet), but members were asked not to limit their responses to that schedule. 5. Would an additional line or question on the form eliminate the inquiry? 6. What areas of the form do you prepare solely for the IRS? 7. One suggestion made during the meeting is the viability of using a series of "screening questions" to determine whether a company needs to submit the entire form. For example, if a company reported an item listed in Schedule I (Summary of Shareholder's Income from Foreign Corporation), it would be required to submit the entire form. If it did not report an item, it would need to submit only summary information. What do you see as the pros/cons of this "screening question" approach? 8. In addition, the possibility of adding a question to Schedule G (Other Information) was raised, specifically, inquiring whether any transactions covered by the form are the subject of a transfer pricing study. What do you think of this suggestion? 9. If the question pertained to section 338 elections, would you be able to collect the information fairly easily? 10. Do you believe the 2009 filing season is a realistic goal? 11. What are the specific steps that your company would need to undertake to revise internal systems to meet that deadline? 12. What costs (human, dollar) would you anticipate being involved in this effort? 13. If possible, please provide a rough timeline for the steps you have outlined above. Members' Summary Comments Respondent #1: There are opportunities to improve Form 5471 (Information Return of U.S. Persons with Respect to Certain Foreign Corporations) through streamlining the information required, as well as using e-filing more efficiently. With the condensed time requirements in which companies must complete their financial reporting obligations--in addition to complying with the internal control requirements of the Sarbanes-Oxley Act of 2002 (SOX)--there has been a...See the full content of this document
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