Tax Reporting Requirements for Disregarded Entities with International Activities

Certain entities, while disregarded for U.S. federal income tax purposes, may nevertheless have U.S. tax and related reporting requirements that owners, responsible persons, and some tax professionals are unaware of. Filing requirements for these so-called ‘‘disregarded entities’’ can arise under the Internal Revenue Code (the ‘‘Code’’) or the Bank Records and Foreign Transaction Act, better known as the ‘‘Bank Secrecy Act’’ (the ‘‘BSA’’) and penalties for a disregarded entity’s failure to file required international information returns can be significant. This article, authored by Larry Sannicandro and Jamie Zug, covers reporting requirements under the BSA and the Code that are often encountered by disregarded entities with international activities. It also explains procedures available to correct deficient international information reporting requirements and related considerations.