If you own or want to start a U.S. business with foreign ties, you need to know about Form 5472. The IRS needs some U.S. firms and LLCs with foreign owners to file this information return. It shows deals between the U.S. business and its foreign owners. This helps the IRS track foreign links and tax rules.
Form 5472 is not a tax form. It is a report for firms that are at least 25% foreign-owned. If your U.S. firm has deals with a foreign owner or group, this form must be filed. It is sent with Form 1120, the U.S. company tax return. If you don’t file, the fine starts at $25,000. This guide will show who must file IRS Form 5472, how it works for LLCs, and how to avoid fines.
Who Must File IRS Form 5472?
1. U.S. Corporations with Foreign Ownership
Any U.S. corporation that is 25% or more owned by a foreign person must file Form 5472.
2. Foreign-Owned Disregarded LLCs
Single-member LLCs treated as disregarded entities must file if the owner is foreign.
3. Foreign Corporations Doing Business in the U.S.
Foreign entities involved in U.S. trade or business are also required to file.
4. U.S. LLCs with 25% or More Foreign Ownership
If a U.S. LLC has a foreign individual or company owning 25% or more, it must file.
Why Is IRS Form 5472 Important?
1. Required for U.S. Tax Compliance
It ensures your business complies with U.S. tax laws for foreign-owned entities.
2. Avoid Heavy IRS Penalties
Missing this form can lead to a minimum $25,000 fine.
3. Reports Foreign Interests
It informs the IRS of foreign ownership and transactions.
4. Part of an Information Return
This form is not a tax return, but an information return disclosing reportable transactions.
When to File Form 5472
1. Due with Form 1120
Form 5472 must be filed along with Form 1120, even if no tax is owed.
2. Calendar-Year Deadline
Due by April 15 for businesses using the calendar year.
3. Fiscal-Year Deadline
For fiscal-year taxpayers, it’s due by the 15th day of the fourth month after year-end.
4. Extension Option
You may request more time by filing Form 7004.
Which Businesses Must File Form 5472?
1. C Corporations with Foreign Ownership
A C Corp with 25% or more foreign ownership must file.
2. Foreign-Owned Single-Member LLCs
LLCs with one foreign member must also file.
3. U.S. LLCs with Foreign Persons
Any LLC with a foreign owner or shareholder is included.
4. Businesses with Foreign Transactions
If the business has deals with a foreign party, it must file.
What Is a Reportable Transaction?
1. Sale or Purchase of Goods
Buying or selling products from or to a foreign person.
2. Loans or Transfers of Money
Includes loans, repayments, and money transfers.
3. Rent or Lease Agreements
Leasing space or property to or from a foreign person.
4. Use of Property
Includes using intellectual or physical property.
5. Paid Services
Services provided or received from foreign entities must be reported.
Steps to File Form 5472
1. Complete Form 1120
Even if your LLC owes no tax, this form must be filed.
2. Fill Out Form 5472
Attach it to Form 1120 accurately.
Steps to File Form 5472
3. Report All Transactions
List every reportable transaction clearly.
4. Submit to the IRS
Use e-file or send by mail before the due date.
Form 5472 for Disregarded LLCs
1. Required for Foreign-Owned LLCs
If a foreign person owns a U.S. LLC, they must file Form 5472 as an information return.
2. File Even with No Income
This is an information return, not based on income earned.
3. Obtain an EIN
The LLC must have an Employer Identification Number.
4. Submit Blank Form 1120
You must file a blank Form 1120 with Form 5472 attached.
Details Required on IRS Form 5472
Business name and EIN
Name and address of the foreign owner
Type of transactions
The total amount of each transaction
Relationship to the foreign person
Common Mistakes to Avoid
1. Not Filing Form 1120
Form 5472 must be attached to Form 1120 — never file it alone.
2. No EIN for the LLC
Disregarded LLCs need an EIN before filing.
3. Missing Transaction Details
Incomplete or vague reports may trigger IRS issues.
4. Filing Late
Delays bring automatic penalties.
5. Assuming It’s Not Needed Without Income
Even if the LLC had no revenue, filing is still required.
Penalties for Not Filing
1. $25,000 for Non-Filing
Each failure to file can cost $25,000 or more.
2. Additional Penalties After Notice
An extra $25,000 added for each 30-day delay after the IRS notice.
3. Criminal Charges Possible
Long-term non-compliance could lead to legal action.
4. Applies to No-Income LLCs
Penalties apply even if the LLC had no activity or income.
Form 5472 and Form 1120: Key Relationship
1. Cannot File Form 5472 Alone
It must always be part of a Form 1120 filing.
2. Required Even Without Tax Due
Even tax-free LLCs must file a pro forma Form 1120.
3. IRS Uses Form 1120 for Recordkeeping
The IRS uses Form 1120 to track U.S. operations of foreign-owned entities.
Does My LLC Need to File Form 5472?
If your LLC is:
A single-member LLC
25% or more owned by a foreign person
Has any reportable transactions
Then yes, you must file Form 5472 with a pro forma Form 1120.
How to Get an EIN for an LLC
If your LLC has a foreign owner, you must get an EIN (Employer Identification Number) before you can file Form 5472 and Form 1120. Here’s how to get it done:
1. Apply Online or Using Form SS-4
If you are in the U.S., you can apply online through the IRS website.
The online tool gives you the EIN right away after you finish the form.
Foreign owners cannot use the online method unless they have a U.S. address and a Social Security Number (SSN).
If you are outside the U.S., use Form SS-4. You must send it by fax or mail to the IRS.
You do not need an SSN or ITIN to get an EIN, but you must follow the rules on Form SS-4.
2. Required Before Filing
Your LLC must get an EIN before filing Form 5472 or Form 1120.
Without an EIN, the IRS will reject your filing.
Even if your business made no money, this step is still required.
The EIN lets the IRS track your firm’s U.S. tax records.
You only need to get it once—it stays the same each year.
3. What You Need to Apply
Business name and U.S. mailing address
Name of the person in charge (owner or rep)
Reason for applying (like starting a new U.S. business)
Business type (LLC, Corporation, etc.)
Phone number and your signature (handwritten or digital)
4. How Long Does It Take?
Online: You get your EIN right away.
Fax: It takes 1–2 weeks.
Mail: It can take 4–6 weeks or more.
To avoid delays, apply early—don’t wait till tax time.
5. Tips for Foreign Owners
If you do not have an SSN, write “Foreign” in that field on Form SS-4.
Try to use a U.S. address if you have one. If not, the IRS also accepts foreign ones.
If the form seems hard, ask a tax pro or CPA to help.
Keep a safe copy of your EIN letter. You’ll need it for every IRS form each year.
Recordkeeping Tips for Form 5472
Save all contracts and invoices
Track all transactions with foreign persons
Keep proof of wire transfers and loans
Back up transaction amounts with documents
Use accounting software for accuracy
Examples of When to File
Example 1: A U.S. LLC pays $5,000 to its foreign parent – must file
Example 2: A U.S. corporation rents office space from a foreign owner – must file
Example 3: A U.S. LLC loans money to its foreign investor – must file
Filing Options
1. E-File with IRS
Use the IRS e-file system or authorized software.
2. File by Mail
Send forms to the IRS mailing address listed for Form 1120.
3. Use a CPA or Tax Software
Professional help reduces the risk of mistakes.
4. Keep Proof of Filing
Save confirmation or tracking as proof for IRS audits.
Filing Form 5472 is not just a task—it is the law for foreign-owned U.S. firms. If your LLC has any foreign owners, this form must be filed. Even if your business made no money, you still need to file Form 5472 with a simple Form 1120. If you skip it, you may face large fines and IRS issues.
You must report all deals with foreign owners or groups. These can include payments, loans, or gifts. File this information return on time, and check each part of the form carefully. Wrong or missed details can cause trouble and extra costs.
Keep clear and full records. Track all money deals. Save copies of contracts, bills, and emails. These help when you file, and if the IRS asks for proof. If you are unsure what to add, ask a tax expert.
The IRS rules for Form 5472, Form 1120, and foreign-owned LLCs can be tough. But you don’t have to do it alone. Meru Accounting helps many foreign-owned firms stay on track. We check each step and make sure your forms are right and sent on time.
We help with getting your EIN, preparing filings, and giving full tax support. If you just set up your LLC or have run it for years, we are here to help. Let Meru Accounting make the process simple and stress-free for you and your business.
FAQs
1. What is IRS Form 5472 used for? It is an information return that tells the IRS about deals between a U.S. business and its foreign owners.
2. Who must file Form 5472? Any U.S. LLC or company that is 25% or more foreign-owned.
3. Do LLCs with no income still need to file? Yes. If they are foreign-owned and have any deals, they must file.
4. What is the penalty for not filing Form 5472? The fine starts at $25,000 and may grow if you delay more.
5. Is Form 1120 required with Form 5472? Yes. You must file Form 1120, even if it has no income.
6. Can I file Form 5472 electronically? Yes. You can e-file both Form 5472 and Form 1120.
7. Do I need an EIN to file Form 5472? Yes. Every foreign-owned LLC must get an EIN to file.