The situation: Rohan holds a US green card but has run a small manufacturing business in Coimbatore for over a decade, structured as an Indian private limited company. He pays himself a modest salary, reinvests most profits into the business, and files Indian corporate returns diligently every year. What he never knew: as a US person owning more than a threshold stake in a foreign corporation, he had an entirely separate, entity-level reporting obligation — Form 5471 — that has nothing to do with whether he personally owed any US tax.
Why this is different from an unreported bank account: Form 5471 isn't about disclosing money — it's about disclosing ownership and control of a foreign entity, including its balance sheet, income statement, and shareholder structure, translated and reported in US tax terms every single year. The penalty for failing to file isn't tied to how much tax was owed — it's a flat, substantial per-year penalty, largely independent of whether the business made a profit at all.
Why it complicated his streamlined filing: where an individual account owner deals with FBAR and possibly FATCA, an NRI who owns a foreign company also needs Form 5471 correctly prepared for each year in the lookback period — with the company's financials properly translated into US GAAP-consistent figures and its income analyzed for Subpart F and GILTI implications, both of which can create current US tax liability on retained foreign business earnings that were never distributed as salary or dividend.
How this resolved: because Rohan's non-compliance was genuinely non-willful — he'd simply never been told a US person owning a foreign business had any separate US filing obligation at all — he proceeded through the applicable streamlined track with corrected Form 5471s included in the amended returns, alongside the standard FBAR and personal account disclosures.
Why NRI entrepreneurs specifically need to check this: unlike an NRE account or a mutual fund, foreign business ownership is exactly the kind of asset a generic streamlined filing checklist can miss entirely if the preparer isn't specifically looking for it. If you're a US person and a director or majority owner of any Indian company, this needs a dedicated review — not an assumption that your personal FBAR filing covers it.