International Information Return Penalty Calculator

International information return penalties apply when U.S. persons fail to file required forms reporting foreign assets, income, or ownership interests. Unlike domestic penalties, these carry fixed dollar amounts ($10,000+ per form) regardless of tax liability. The IRS has aggressive enforcement, and penalties can quickly exceed the value of unreported items.

Form 8938 reports specified foreign financial assets under the Foreign Account Tax Compliance Act (FATCA). Filing thresholds depend on residency and filing status: U.S. residents ($50,000 year-end / $75,000 max) must file if single, or $100,000/$150,000 if married filing jointly. Foreign residents have higher thresholds ($200,000/$300,000 single, $400,000/$600,000 MFJ). Penalty: $10,000 initial plus $10,000/month continuation, max $60,000.

Form 5471 reports information about certain foreign corporations owned by U.S. persons. There are 5 categories: Category 1 (10%+ CFC shareholder acquiring stock), Category 2 (officer/director of foreign corp), Category 3 (acquirer of 10%+ interest), Category 4 (control >50%), and Category 5 (10%+ CFC shareholder). Penalty: $10,000 initial per year, plus $10,000/30 days after IRS notice, max $60,000 per year.

Form 3520 reports transactions with foreign trusts and receipt of foreign gifts over $100,000. Penalties vary by part: Part I (contributions) - 35% of contribution, Part II (ownership) - 5% of trust assets, Part III (distributions) - 35% of distribution, Part IV (gifts) - 5%/month up to 25%. Form 3520-A is the annual return filed by the foreign trust itself; if the trust fails to file, the U.S. owner faces a 5% penalty on gross trust assets.

Form 8865 is required for U.S. persons who control or have significant interests in foreign partnerships. Similar to Form 5471, the initial penalty is $10,000 per year, with continuation penalties of $10,000 per 30-day period after IRS notice, capped at $60,000 per year. Foreign tax credit reductions may also apply.

Form 926 must be filed when a U.S. person transfers property to a foreign corporation in certain nonrecognition transactions. The penalty is 10% of the fair market value of the transferred property, with a maximum of $100,000 per return. This penalty applies regardless of whether any tax is actually due on the transfer.

Form 8621 reports ownership of Passive Foreign Investment Companies (PFICs). Common PFICs include foreign mutual funds, foreign ETFs, and certain foreign holding companies. The penalty for failure to file is $10,000 per year. PFICs also have punitive tax rules (excess distribution regime) that can result in additional tax and interest charges.

The IRS offers two streamlined programs for taxpayers to voluntarily come into compliance: SDOP (Streamlined Domestic Offshore Procedures) for U.S. residents involves a 5% miscellaneous penalty on highest aggregate asset balance. SFOP (Streamlined Foreign Offshore Procedures) for qualifying non-residents has NO penalty. Both require certifying that all prior failures were non-willful. Streamlined procedures are not available after IRS contact.

Unlike domestic penalties where reasonable cause is relatively accessible, international penalty reasonable cause has a very high burden of proof. The taxpayer must show ordinary business care AND prudence, which typically requires documented reliance on a qualified international tax professional who was provided complete and accurate information. Simple ignorance of filing requirements is rarely sufficient.

For Forms 8938, 5471, 8865, and 8865, continuation penalties begin after the IRS sends a 90-day notice demanding filing. If the form is not filed within 90 days, an additional $10,000 penalty accrues every 30 days thereafter. Maximum continuation penalty is typically $50,000 (5 periods x $10,000), bringing total maximum to $60,000 per form per year.