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Disclaimer: The following is my own experience. IRS compliance is obligatory for USA citizens living abroad, however your own situation might be different from mine. Please consult a USA lawyer if you have questions. IRS Form 5471 Interest in Foreign Corporations - Click Here Background: I lived in Costa Rica between 2004-October 2012 as a non-resident, traveling in and out of the country frequently. I typically spent 6-8 months a year in Costa Rica. In late 2004 I was hired to work for a local business as a marketing consultant. A local lawyer setup a Sociedad Anonima that I owned and operated as an entity to collect my earnings. It was the only way the company could legally hire me as a non-resident foreigner. I paid Impuestos sobre la Renta each year after September 10 in accordance with local law. I paid USA taxes each April as usual. I ceased working for the local company in late 2006. Afterwards I worked alone out of my apartment and used my own corporation to pay applicable local taxes. All taxes and Registro Nacional fees have been paid to present. Why did I pay taxes if I wasn't a resident? My general understanding is that tourists, while technically allowed to own and operate a business, aren't really supposed to live tax free coming and going every 90 days. I wasn't doing this immigration routine, but I was earning money in the country. I thought it would be better to pay Costa Rica something instead of nothing. My name was on their books and I had local bank accounts. IRS Form 5471: All USA citizens who are principal owners, shareholders, etc. of foreign companies must report to the IRS each year. I had no idea this form existed. I did my USA taxes with TurboTax each year. When they asked if I had any "interest in foreign corporations", I naively thought that meant I bought a company's stock in a foreign market, invested a significant amount of money (ie. $250,000 or more) in a local business, or operated a multi-million dollar entrepreneurial enterprise. In reality my humble S.A., which I owned and operated, is (in the opinion of my tax lawyer) required to be reported on Form 5471, now delinquent 6 years. I made a middle-class income and wasn't living a wealthy lifestyle, but the fact that the business was incorporated overseas means that I am liable to the USA government. Form 5471 is best completed by an accountant unless you have time on your hands The IRS estimates 38 hours of time required to learn Form 5471 law, complete the form accurately, and file it appropriately. Remember, this is 38 hours on top of your Foreign Bank Account Forms, Foreign Earned Income Forms, and FATCA form if applicable. It's actually advisable to have an experienced CPA do it for you. Like most people, I can't dedicate an entire workweek to doing paperwork for the government. Delinquent and/or incomplete 5471 Forms are penalized $10,000 USD per year Again, everyone's situation is different, but from casual reading online, the IRS does NOT give people a break from these penalties short of an extreme circumstance. The IRS has never sent me an audit letter, which allows me to come forward after the fact to voluntarily disclose non-compliance. That doesn't mean I get a pass on the $50,000+ fines they can assess. Does a Costa Rica S.A. really need to be reported to the IRS? This depends on your situation and the scope of your business operations. I highly advise consulting a USA tax attorney with knowledge about offshore finance. It is very common for expats in Costa Rica to use corporations to own vehicles, buy real estate, operate a small business, or for basic asset protection from any local law suits. This was the explanation I was given in 2005 when I signed for my S.A. I now get the impression it must be reported if the S.A. is used as a means to produce income or control assets. If you have any doubts, consult someone knowledgeable before you get fined $10,000 a year. I don't think Costa Rica reports who owns what S.A.s to the USA government, but as a USA citizen you must report foreign income, and if such income is derived through a local business using an S.A. you operate, you must also report your ownership in this business. I will followup at a later date once I hear back from the IRS. At this point, I am collecting old bank statements and Costa Rica tax records to complete all the paperwork before submitting it to the USA government.