Form 5472: the filing most foreign-owned LLCs never hear about

The short version

If you are a non-resident and you own a single-member LLC in the United States, you are very likely required to file Form 5472 attached to a pro-forma Form 1120, every year — even if the company made no profit, and even if it never sold anything. The penalty for not filing starts at $25,000 per year.

This is the most common surprise among founders abroad. They read that a US company can be "tax free" and concluded that nothing was owed at all. The exemption, where it applies, is from paying tax. It is not an exemption from filing.

Why the form exists

A single-member LLC is treated as a disregarded entity: the IRS does not see it as separate from its owner. When the owner is American that is simple enough — the activity shows up on their personal return. When the owner is foreign, there is no US return for it to show up on, and the government had no visibility into what was happening inside the entity. Form 5472 is that visibility.

So it is not a tax return in the ordinary sense. It is an information disclosure about transactions between you and your company.

Who has to file

• A US single-member LLC that is at least 25% owned by a foreign person or entity.
• That had a reportable transaction during the tax year — a condition much broader than most people assume.

Multi-member LLCs follow a different path (Form 1065 and Schedules K-1), and C-Corps file a full 1120. This guide is about the first case specifically, because it is the most common one among our clients.

What counts as a "reportable transaction"

This is where the mistake happens. People assume it means sales or profits. It is wider than that: it covers transactions with related parties, and you are a related party to your own company.

• Money you move into the company's account — including the initial capital.
• Money you take out to your personal account.
• Company expenses you pay out of your own pocket.
• Loans in either direction between you and the company.
• Buying, selling or leasing any asset between you and the company.

In practice this means a dormant company that opened a bank account and received $100 from its owner to cover a fee has had a reportable transaction.

What actually gets filed

1. A pro-forma Form 1120. The income and expense sections are not completed — only the header: company name, address, EIN. It is a cover sheet for the form below.
2. Form 5472. Details of the foreign owner, their country, their tax identification number there if they have one, and the value of each category of transaction.

An EIN is a prerequisite. The filing cannot be made without one, and one cannot be obtained on the last day — which is the direct cause of a good number of missed first deadlines.

The deadline

For a calendar tax year, the usual due date is 15 April of the following year, extendable to 15 October by filing Form 7004. The extension extends the time to file — which is what matters here, because the penalty attaches to filing rather than to payment.

A practical note: these two forms are not submitted through the ordinary e-file route. They go by fax or mail to a designated address, which is slow enough that it should not be left to the final week.

The penalty

Failing to file — or filing with incomplete information — starts at $25,000 per form, per year, and escalates if the failure continues after the IRS issues a notice. The company does not need to have made a profit, and no tax needs to be owed.

That is the crux of it: the penalty has nothing to do with profit. A loss-making or dormant company pays exactly what a profitable one pays.

Mistakes we actually see

• "My company was inactive this year." A dormant company that received any transfer has a reportable transaction.
• "My accountant at home handles it." An accountant unfamiliar with the US system usually does not know the form exists.
• Confusing it with the state annual report. The annual report is an obligation to the state; Form 5472 is federal. Filing one does not cover the other.
• Leaving the EIN until after year end — then discovering the deadline is close and the number has not issued.

What we do about it

The deadline goes into the compliance calendar in your dashboard on the day the company is formed, you get a reminder well before it, and on the plans that include it we prepare and file both forms for you. More importantly, we ask you about the transactions — because most people who miss this form are not avoiding it. They did not know it applied to them.