Form 5472 for foreign-owned US LLCs: who must file, what to report and when

A US single-member LLC owned by a non-US person is a foreign-owned disregarded entity. Each year it must file Form 5472 attached to a pro forma Form 1120, reporting transactions with its owner such as capital contributions and expenses the owner paid. The deadline is 15 April for calendar-year entities, extendable by six months, and the penalty for not filing is $25,000.

Many non-resident founders form a Wyoming or Delaware LLC, open a bank account and assume that with no US income there is nothing to file. Since 2017 that has not been true.

Who has to file Form 5472?

Two groups:

• Foreign-owned US disregarded entities. A single-member LLC wholly owned by one non-US person. Treasury regulations treat it as a corporation solely for Form 5472 purposes.
• US corporations that are at least 25% foreign-owned and have reportable transactions with a foreign related party.

What counts as a reportable transaction?

Almost any movement of money or value between the LLC and its owner or the owner’s related parties, including:

• capital contributions and distributions
• loans to or from the owner
• company expenses the owner paid personally, including formation and registered agent fees
• sales or purchases of goods and services, rent and royalties

Because the owner usually pays the formation costs, almost every new foreign-owned LLC has a reportable transaction in its first year.

How is it filed?

Form 5472 is attached to a pro forma Form 1120 that shows only the LLC’s name, address and EIN, with “Foreign-owned U.S. DE” written across the top. For these entities the return is usually filed by fax or post to the IRS address given in the current form instructions, so check those instructions each year before filing. The LLC needs an EIN before it can file.

When is it due?

By the 15th day of the fourth month after the tax year ends, so 15 April for a calendar-year LLC. Form 7004 extends the deadline by six months.

What is the penalty for not filing?

$25,000 per form, per year. If the IRS sends a notice and the form is still not filed within 90 days, a further $25,000 applies for each 30-day period of continued failure.

Does the owner also need a US tax return?

Only if the LLC has income effectively connected with a US trade or business, or other US-source income that is not fully covered by withholding. In that case the owner files Form 1040-NR and needs an ITIN if not eligible for a Social Security number.

Do I need to file Form 5472 if my LLC had no income?

Usually yes. The filing is triggered by reportable transactions with the owner, not by income. Paying the formation costs or putting money into the LLC is enough.

I missed previous years. What should I do?

File the missing returns as soon as possible, ideally with a reasonable-cause statement explaining why they were late. Acting before the IRS sends a notice puts you in a stronger position.