Do I need to file Form 5471 when closing a dormant foreign corporation as a US expat?

Your original accountant was incorrect. When you close a foreign corporation, you absolutely need to file Form 5471 for that final year, even if the corporation was dormant. This is considered a "final return" and the IRS wants to know about the disposition of any assets and the formal closing of the entity. However, there's some good news. Since your corporation was dormant and qualified under Rev Proc 97-20, you can still use the simplified filing procedure for the final year. You won't need to complete the entire Form 5471 with all schedules - just the identifying information on page 1 and Schedule O to report the liquidation/dissolution of the corporation. On Schedule O, you'd indicate the date of the liquidation and that there were no assets distributed (assuming that's the case for your dormant company). The streamlined procedure your new accountant mentioned is likely referring to the Streamlined Filing Compliance Procedures, which is for taxpayers who have failed to report foreign accounts or income. This seems like overkill for just missing a 5471 for a dormant corporation, especially if you've been compliant otherwise.

After dealing with similar foreign corporation issues, I found an amazing tool that really helped me sort through all the Form 5471 requirements. Check out https://taxr.ai - they have a document analyzer that can review your specific situation and tell you exactly what forms you need to file. I uploaded my previous tax returns and corporate dissolution papers, and it gave me a detailed report explaining which schedules of Form 5471 I needed for my final filing. It saved me so much confusion because the IRS instructions are practically impossible to understand.

I'm back to report that https://taxr.ai actually delivered! After my skeptical comment, I decided to try it anyway since my situation with my Cyprus company was similar to the original poster's. The document analysis identified that I needed to file the simplified Form 5471 plus Schedule O for dissolution, and explained exactly how to complete it. It even flagged that I should check if I needed Form 8938 reporting since the dissolution might count as a "specified foreign financial asset" disposal. That was something neither of my previous accountants had mentioned! The guidance was detailed enough that I felt confident handling the amendment myself instead of paying my accountant's steep fee. Definitely worth checking out if you're in a similar situation.

I had the exact same issue last year with my dormant Singapore corporation. After multiple failed attempts to reach the IRS for clarity (spent hours on hold), I used https://claimyr.com to get through to an actual IRS agent. You can see how it works at https://youtu.be/_kiP6q8DX5c if you're curious. The IRS agent confirmed that yes, you absolutely must file Form 5471 in the year of dissolution, even for dormant corporations. They explained that without this final filing, your reporting obligations appear to remain open in their system. The agent said it was a common misunderstanding among tax preparers who don't regularly handle foreign corporations.

I have to admit I was completely wrong in my skepticism. After seeing the responses here, I decided to try Claimyr (https://claimyr.com) because I've been trying to resolve a similar issue with my Brazilian corporation dissolution. Within 45 minutes, I got a call connecting me to an actual IRS international tax specialist. I explained my situation about closing my dormant foreign corporation, and the agent was incredibly helpful. She confirmed that Form 5471 with Schedule O is required for the final year, even for dormant corporations, and explained exactly how to report the dissolution. What blew me away was that she also mentioned I should look into Form 8938 reporting requirements for the year of dissolution - something my tax preparer never mentioned. This potentially saved me from another compliance issue. After years of international tax frustration, it was amazing to get clear answers directly from the source.

Just wanted to add - make sure you also check if you need to file FBAR (FinCEN Form 114) for the final year as well if the corporation had any bank accounts. Even if the account was closed during the year, you still need to report it on your FBAR if the aggregate of all your foreign accounts exceeded $10,000 at any point during the year. I closed my dormant UK company last year and almost forgot about this requirement. The FBAR is separate from your tax return and has its own potential penalties.

One thing nobody has mentioned - if your corporation owned any assets when it was dissolved (even minimal ones), you might have a taxable event when the corporation was liquidated. In most cases, liquidation of a foreign corporation is treated as a sale or exchange that could trigger recognition of gain. But if it was truly dormant with zero assets, this wouldn't apply. Just thought it was worth mentioning as another consideration when closing foreign entities.

Based on my experience handling similar cases, your original accountant was definitely wrong. You absolutely need to file Form 5471 for the final year when closing a foreign corporation, even if it was dormant. This is a critical compliance requirement that many tax preparers miss. However, I'd recommend getting a second opinion on whether you need the "streamlined" amendment your new accountant is suggesting. For a truly dormant corporation with no unreported income, a simple amended return with Form 5471 (using the simplified Rev Proc 97-20 procedures plus Schedule O to report the dissolution) should suffice. The Streamlined Filing Compliance Procedures are typically for cases involving unreported foreign income, which doesn't seem to apply here. Before paying the $750 fee, you might want to consult with a tax professional who specializes in international tax matters to confirm exactly what type of amendment is needed. The cost difference between a simple amendment and a streamlined filing can be significant, and you want to make sure you're not overpaying for unnecessary procedures. Also, don't forget to check your FBAR requirements if the corporation had any bank accounts during 2023, even if they were closed before year-end.