February 2000

Tax Forms for Reporting Cross-Border Transactions

The United States has various requirements for reporting cross-border transactions, and more than 80 IRS forms are peculiar to cross-border situations. This article is the first in a series designed to inform the CPA about specific forms and the scope of reporting mandated by certain business transactions.

Form 673, Statement for Claiming Benefits Provided by Section 911 of the IRC.

The U.S. employee files this form with his or her employer to exclude wages earned abroad from U.S. income tax withholding to the extent of the foreign earned income tax exclusion.

Form 2555, Foreign Earned Income. Taxpayers use this form to take the foreign earned income and qualified foreign housing exclusions. The form is filed with the individual's 1040.

Form 706-CE, Certificate of Payment of Foreign Death Tax. This form is used to reduce the U.S. estate tax on a decedent whose estate is taxed by more than one country.

Form 5471, Information Return of U.S. Persons with Respect to Certain Foreign Corporations. This information return is attached to the affected individual or entity and, depending on the circumstances, may generate a tax liability.

Form 5472, Information Return of a Corporation. Companies that either have significant foreign ownership or are foreign corporations doing business in the United States must complete this form.

Form 3520, Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts. The penalties for not filing this return timely are severe and out of proportion with the amounts involved.

Form 3903-F, Foreign Moving Expenses. Taxpayers file this form to show moving expenses in other countries.

Form 6166, Certification of Filing a Tax Return. This form requests IRS certification that a taxpayer has filed a U.S. tax return. The IRS gives this information to the foreign tax authority so the taxpayer can receive a reduction in withholding of foreign tax under a treaty with foreign jurisdiction regarding payments of dividends or interest.

Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts. U.S. persons must report their interests in foreign bank accounts, even if they have no financial interest but are merely signatories of the accounts.

Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons, and Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding. These forms, which show the foreign person's income subject to withholding, work much like a W-3, with a W-2 in the domestic setting.

Form 8805, Partner's Information Statement of Section 1446 Withholding Tax. This form lists foreign partner information necessary to file a U.S. tax return, taking credit for the tax withheld on amounts shown on the partner's K-1. Section 1446 mandates withholding on income shown on the K-1 of a foreign partner of a U.S. partnership.

Form 8288, U.S. Withholding Tax Return for Dispositions by Foreign Persons of U.S. Real Property Interests. This form reports the withholding tax on U.S. real estate holdings sold by non-U.S. persons.

Form 8833, Treaty-Based Return Position Disclosure Under Section 6114. Taxpayers file this form to disclose a treaty-based return position.

Watch the March issue of The Trusted Professional for a description of additional tax forms for cross-border transactions. *

Lawrence Shoenthal is chair of the NYSSCPA International Taxation Committee and a principal with M.R. Weiser and Co. LLP.