Form 5472 Filing for Foreign-Owned US LLCs

Who has to file Form 5472

• Foreign-owned single-member LLCs. Since 2017 these are treated as corporations solely for Form 5472 reporting, so the LLC files a pro-forma Form 1120 with Form 5472 attached.
• US corporations that are 25% foreign-owned. A C-corporation with a foreign shareholder holding 25% or more of vote or value.
• Foreign corporations engaged in a US trade or business. Reporting on their US-connected related-party transactions.

A multi-member LLC does not file Form 5472. It files Form 1065 with a Schedule K-1 for each member instead. If you are unsure which category your entity falls into, that classification is the first thing we check.

What counts as a reportable transaction

Almost any movement of money or property between the LLC and its foreign owner or a related party:

• Capital contributions, including the money used to pay state formation fees
• Distributions of any size
• Loans in either direction, and interest on them
• Sales, purchases, rent, royalties and management fees
• Amounts paid on the LLC’s behalf from a personal account

This is why a dormant LLC still has an obligation. Forming the company and funding it are reportable events in the first year even if not a single customer ever pays you.

The penalty, precisely

• $25,000 per Form 5472, per tax year, for failing to file on time or filing a substantially incomplete form.
• A further $25,000 for each 30-day period the failure continues after the IRS issues a notice.
• There is no small-business exemption and no reduction for having zero revenue.

Penalty abatement for reasonable cause is possible but is not granted for simply not knowing about the requirement. Filing late voluntarily is a materially better position than waiting for the IRS notice.

What we do

1. Classify the entity. We confirm whether you file Form 5472, Form 1065 or Form 1120, based on ownership and elections on file.
2. Reconstruct reportable transactions. We work from your bank statements and formation records, including the ones paid from your personal account.
3. Prepare Form 5472 and the pro-forma Form 1120. Only the identifying information on the 1120 is completed, which is what the IRS expects for a disregarded entity.
4. File by fax or mail. This return cannot be e-filed. We submit it and keep the transmission confirmation as proof of timely filing.
5. Extend if needed. Form 7004 filed by 15 April moves the deadline to 15 October.

Timeline

• Due date: 15 April for a calendar-year LLC, filed with the pro-forma Form 1120.
• Extended deadline: 15 October, if Form 7004 is filed on time.
• Our turnaround: typically 3 to 5 business days once we have your bank statements and formation documents.
• Prior years: we prepare and file back years too, which is the usual first step for an LLC formed two or three years ago that has never filed.