IRS ISSUES CROSS-BORDER TAX GUIDANCE FOR COVID-19 TRAVEL DISRUPTIONS
The Internal Revenue Service has issued guidance that provides relief to foreign individuals impacted by COVID-19 emergency travel disruptions. Revenue Procedure 2020-20 provides that certain foreign nonresident individuals may exclude up to 60 days of presence in the United States for purposes of determining their U.S. tax residency during 2020 and for determining their qualification for certain tax treaty benefits.
Single-Member Foreign-Owned LLC Reporting Obligations
The United States Treasury Department and Internal Revenue Service (IRS) issued final regulations in December of 2016 that now subject foreign-owned single-member limited liability companies (LLCs) that are disregarded for U.S. income tax purposes (i.e., LLCs that have not elected to be classified as corporations) to the informational reporting requirements established under Internal Revenue Code (IRC) Section 6038A for 25% foreign-owned United States corporations. The new regulations now generally require foreign-owned single-member LLCs to obtain a U.S. employer identification number (EIN) and annually file a pro forma Form 1120 corporate income tax return together with Form 5472 identifying each 25% or greater direct and ultimate indirect foreign owner. The first filings pursuant to the new regulations will generally be due as early as April 17, 2018, covering tax years starting in 2017. The IRS will assess a penalty of $10,000 for each year the new reporting requirement is not timely satisfied.