Form 5472 for foreign-owned LLCs: who files, what goes on it, and the penalty
Form 5472 is the filing non-resident LLC owners miss most often, and the penalty starts at 25,000 USD. Here is what it is and how it works.
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Most non-resident founders form a US LLC, open an account, and never hear of Form 5472 until an accountant mentions it, or a penalty notice arrives. It is the most expensive filing to miss, and the easiest to get right. This is general information; have a US tax professional prepare the filing.
What Form 5472 is
Form 5472 reports transactions between certain US companies and their foreign owners or other related parties. Since tax years beginning in 2017, the IRS treats a US single-member LLC owned by a foreign person as a corporation for this one purpose. So the LLC files Form 5472 even though it is disregarded for income tax.
Who files
| Entity | Files Form 5472? |
|---|---|
| Single-member LLC, foreign owner | Yes, every year with reportable transactions |
| Single-member LLC, US owner | No |
| US corporation 25% or more foreign-owned | Yes, with reportable transactions |
| Multi-member LLC taxed as a partnership | No (other forms apply) |
What counts as a reportable transaction
For a foreign-owned single-member LLC, almost any money moving between the owner and the LLC:
- Capital the owner puts in, including the money to form the LLC
- Distributions the owner takes out
- Loans in either direction
- Payments for services or goods between them
- Costs the owner pays on the LLC's behalf, such as state fees or the registered agent
Since the owner almost always pays formation fees, most of these LLCs have a reportable transaction in their first year.
How it is filed
The LLC attaches Form 5472 to a pro forma Form 1120, which carries only the identifying information the instructions ask for. It is due on the 1120's due date, normally the 15th day of the fourth month after the tax year ends (15 April for a calendar year), and an extension with Form 7004 is available. The LLC needs an EIN to file; see what is an EIN.
The penalty
25,000 USD for each form not filed or filed incomplete, and a further 25,000 USD for each 30 days the failure continues after 90 days from an IRS notice. Penalties can sometimes be abated for reasonable cause, but planning on that is a poor strategy.
Records to keep
Form 5472 requires the LLC to keep records that support the transactions reported. A business account in the LLC's name, separate from the owner's money, makes this simple: every capital injection and distribution is a visible line. The US LLC banking guide covers the rest of the setup.
On Rivet
Rivet gives a US LLC with foreign owners USD details in the LLC's own name, so money in and out between owner and company shows on a statement your accountant can use for Form 5472. See Bank accounts.
Questions people ask
Who must file Form 5472?
A 25% foreign-owned US corporation, and a foreign corporation engaged in a US trade or business, when they have reportable transactions with related parties. Since 2017, a US single-member LLC owned by a foreign person is treated as a corporation for this purpose and must file too.
What is the penalty for not filing Form 5472?
25,000 USD for each failure to file or to keep the required records. If the IRS sends a notice and the failure continues for more than 90 days, an extra 25,000 USD applies for each 30-day period.
Do I file Form 5472 if my LLC had no income?
Usually yes. If the owner put money in to form the LLC, or paid its fees, those are reportable transactions. Most foreign-owned single-member LLCs have at least one reportable transaction every year.
How do I file Form 5472 for a disregarded entity?
Attach it to a pro forma Form 1120 that shows only the entity's name, address, EIN and the required items, and mark the top as described in the instructions. The IRS does not accept e-filing for every case, so read the current instructions for the mailing or fax address.
Sources
William covers what happens once a company starts moving money: getting the business verified, paying contractors and suppliers abroad, and keeping card spend under control. William writes for the founder or finance lead who has to make it work this week, and links every rule cited to the text it comes from.
More from William Sunjo M. →This article is general information, not legal, tax or financial advice. Rules and fees change; check the sources above and the provider’s current terms before you act on them.
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- form 5472 instructions
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