The US Internal Revenue Service (IRS) has released an updated practice unit on the Allowance of Deductions and Credits for 1120-F Delinquent Returns on 25 March 2025.
Form 1120-F serves as the US income tax return specifically for foreign corporations.
The process overview includes the following:
This Practice Unit was updated to remove references to resources that are no longer current or available, to update the effective date of IRM 4.61.14 and to update technical contents on slides 8, 11, 16 and 17 to ensure agreement with the updated IRM. Minor typographical or formatting errors were corrected throughout the Unit. It supersedes the 07/08/2022 Practice Unit of the same title.
- A Form 1120-F filer is entitled to reduce its gross income by deductions and credits (other than the credit provided under IRC 33 for tax withheld at source and the deduction for charitable contributions allowed under IRC 170, whether or not connected to effectively connected income (ECI)) only if its return is timely filed.
- For this purpose, a foreign corporation’s return is timely if it is filed within18 months after the return’s due date under IRC 6072 or, if the corporation failed to file a return for the preceding tax year and the year in issue is not the first year for which a return is required to be filed, by the date that the IRS notifies the corporation that a return is due.
- Except as noted above, under IRC 882(c)(2) an untimely foreign corporation filer is not entitled to deductions and credits and the regulations thereunder and will be subject to tax under IRC 11 on its gross income at the rate provided for the applicable tax year.
- However, Treasury Regulation 1.882-4(a)(3)(ii) permits the filing deadline to be waived.
- This process unit explains the deadline waiver process.
- The Waiver Procedure Guideline is intended to assure that the waiver process is consistently applied to all Form 1120-F filers.
- If the filing deadline is waived, a foreign corporation late filing a Form 1120-F may reduce its gross income by deductions and credits to determine its taxable income.
- If a waiver is not granted the deductions and credits are (except as noted above) not allowable on a delinquent Form 1120-F.
- The foreign corporation must establish, based on the facts and circumstances, that it acted reasonably and in good faith in failing to timely file a return.
