Proposed revision of Form 5471.

The Internal Revenue Service recently sought input from Tax Executives Institute and other stakeholders regarding proposed changes to Form 5471, Information Return of U.S. Persons with respect to Certain Foreign Corporations. On June 6, TEI representatives met with you and other representatives from LMSB and Chief Counsel to discuss issues related to the form. During the meeting, TEI committed to solicit input from members of its IRS Administrative Affairs and International Tax Committees on proposed revisions to the form.

TEI's 7,000 members are uniquely qualified to comment on this form since they are accountants, attorneys, and other business professionals who work for 3,200 of the largest companies in the United States, Asia, Canada, and Europe. TEI represents a cross-section of the business community, and is dedicated to developing and effectively implementing sound tax policy, to promoting the uniform and equitable enforcement of the tax laws, and to reducing the cost and burden of tax administration to the benefit of taxpayers and government alike. As a professional association, TEI is committed to maintaining a tax system that works--one that is administrable and with which taxpayers can comply in a cost-efficient manner.

TEI commends the IRS for seeking to streamline the information required to be submitted on Form 5471, because the current form imposes substantial burdens for taxpayers. We very much appreciate the opportunity to submit these comments.

In response to LMSB's request, TEI sought reactions on Form 5471 from its membership generally (as part of an email message to all members). In addition, the Institute asked members of the two committees with responsibility, respectively, over IRS compliance matters and international tax matters to respond to a series of 13 questions. As discussed on June 6, different members will be affected differently by changes in Form 5471, depending primarily on their own internal reporting systems, the number of subsidiaries involved, and the complexities of their corporate structures. The divergence of views is evident from the attached summary of responses. At the same time, the responses reveal several key points.

First, although the ability to adapt internal reporting systems may vary from company to company, the more the form can rely on U.S. generally accepted accounting principles (GAAP) or local accounting standards (or the International Financial Reporting Standards), the easier it...