Form 5472 for Foreign-Owned US LLCs: Who Files, What to Report, and How to Avoid the $25,000 Penalty

Yes. A US LLC that has a single foreign owner and has not elected corporate tax treatment must file Form 5472, attached to a pro forma Form 1120, for every tax year in which it has a reportable transaction with its owner or another related party. In practice that is almost every year, because money moving between you and your LLC counts.

This surprises people because a single-member LLC is normally a disregarded entity. It does not file its own income tax return; its income shows up on the owner's return. Before 2017 a foreign owner with no US-source business income often had no US filing at all.

That changed with Treasury Decision 9796, published December 13, 2016. It added Treas. Reg. §301.7701-2(c)(2)(vi), which treats a domestic disregarded entity wholly owned by a foreign person as a domestic corporation, but only for the reporting, recordkeeping and compliance rules of IRC §6038A. The rule applies to tax years beginning on or after January 1, 2017.

The effect: your LLC is still disregarded for income tax. It does not pay corporate tax because of this rule. It just has to tell the IRS who owns it and what moved between them.

The rule applies when a foreign person has direct or indirect sole ownership of the US LLC. A foreign person includes a nonresident alien individual, a foreign corporation, a foreign partnership, or a foreign trust or estate.

Common situations we see:

• A founder living in India, the UK or Australia forms a Wyoming or Delaware LLC to sell software to US customers.
• A foreign parent company forms a US LLC to hold a US bank account or sign a US lease.
• A non-US investor forms a single-member LLC to hold US real estate or a startup investment.

If the LLC has two or more members, it is a partnership by default and files Form 1065 instead, with different foreign-partner rules. If the single-member LLC elected to be taxed as a C corporation, it files a regular Form 1120 and, as a 25% foreign-owned US corporation, attaches Form 5472 to that return. This article covers the disregarded single-member case.

One point to check: if the foreign owner later becomes a US tax resident (for example, by getting a green card or meeting the substantial presence test), the LLC is no longer foreign-owned for that year, and this filing requirement falls away.

Form 5472 reports transactions between the LLC and its foreign owner or other related parties. For a foreign-owned disregarded entity, Part V of the form captures transactions that would otherwise be ignored because the LLC and its owner are the same taxpayer.

The IRS instructions say these include amounts paid or received in connection with the formation, dissolution, acquisition and disposition of the entity, and that contributions to and distributions from the entity are included. So all of these are reportable:

• Money you wire from a personal or foreign company account into the LLC's US bank account (a capital contribution)
• Money the LLC sends back to you (a distribution)
• The state filing fee, registered agent fee or formation service fee, if you paid it personally on the LLC's behalf
• Loans in either direction, and interest on them
• Payments for services, licenses or goods between the LLC and your foreign company
• Expenses the owner pays on the LLC's behalf, or vice versa

This is why 'my LLC had no income' does not get you out of the filing. If you paid to form it in its first year, there was a reportable transaction. Keep a simple ledger of every transfer between you and the LLC with date, amount and purpose. It makes the form straightforward and doubles as the record the regulations require you to keep.

The Form 1120 that goes with Form 5472 is a cover sheet, not a real corporate return. The IRS instructions say the only information required on the Form 1120 is the name and address of the foreign-owned US disregarded entity and items B and E on page one (the EIN and total assets). You also write 'Foreign-owned U.S. DE' across the top.

On Form 5472 itself, the key parts are:

1. Part I: the LLC's details, and the box for a foreign-owned US DE.
2. Part II: the 25% foreign shareholder (for a single-member LLC, that is the owner), including country of citizenship and foreign tax identification number if they have one. If there is no FTIN, the instructions allow 'None' or 'N/A,' and a reference ID number is used when no US identifying number is entered.
3. Part III: the related party, which for a single-member LLC is usually the same foreign owner.
4. Parts IV and V: the dollar amounts of transactions, with Part V used for the contributions, distributions and formation-related payments described above, described on an attached statement.

The LLC needs its own EIN to file. A foreign owner without an SSN or ITIN applies on Form SS-4 by phone (267-941-1099, not toll-free, 6 a.m. to 11 p.m. Eastern, Monday to Friday), by fax (generally about four business days) or by mail (about four weeks), per the SS-4 instructions. The online EIN application requires the responsible party to have an SSN or ITIN.

Form 5472 is due by the Form 1120 due date, including extensions. For a foreign-owned disregarded entity, the tax year follows the foreign owner's US tax year if the owner has a US filing obligation, and otherwise is the calendar year. Most foreign founders have no other US filing, so their LLC uses the calendar year and the package is due April 15 of the following year (the 15th day of the fourth month). For the 2026 tax year, that is April 15, 2027.

To extend, file Form 7004 by the original due date. The instructions specify three details that differ from a normal Form 7004:

• Enter the Form 1120 code on Part I, line 1.
• Write 'Foreign-owned U.S. DE' across the top.
• Send it to the same fax number or address used for the Form 5472 package, not the regular Form 7004 address.

A timely Form 7004 gives you six more months, to October 15 for a calendar-year LLC. Because the pro forma 1120 has no tax due, the extension does not create interest or late-payment exposure. It is free insurance if your records are not ready.

Foreign-owned US disregarded entities cannot file Form 5472 electronically. As of the current IRS instructions, checked October 2026, you have two options:

• Fax the pro forma 1120 and Form 5472 to 855-887-7737. The IRS asks for 300 DPI or higher.
• Mail them to: Internal Revenue Service, 1973 Rulon White Blvd., M/S 6112, Attn: PIN Unit, Ogden, UT 84201.

Do not use the mailing address from the regular Form 1120 instructions. The penalty covers failures to file in the manner prescribed, so the routing matters.

We usually recommend fax for speed and mail as a backup only when fax fails. Keep the fax transmission report showing the date, time, number dialed and page count. If you mail from abroad, use a courier with tracking, because foreign postmarks do not get the US timely-mailing presumption. The IRS has been modernizing its e-file systems, so check the current Form 5472 instructions each filing season in case this changes.

The penalty for failing to file Form 5472 when due and in the manner prescribed is $25,000 per form (IRC §6038A(d)). The same penalty applies for failing to maintain the required records. Filing a substantially incomplete form counts as a failure to file. If the failure continues more than 90 days after the IRS mails a notice, an additional $25,000 applies for each 30-day period (or part of one) that it continues.

This penalty applies even though no income tax is owed, so a single missed year on an LLC that cost a few hundred dollars to form can produce a five-figure bill.

Ways to stay out of trouble:

• Calendar April 15 every year from the year you form the LLC, including the first partial year.
• Keep the transaction ledger and bank statements so Part V is accurate.
• File the extension if you are close to the deadline. It costs nothing.
• If you discover missed years, fix them before the IRS contacts you. Late filings with a reasonable-cause statement are more likely to get penalty relief than filings made after a notice. Talk to a tax professional about the right approach for multiple missed years.

If penalties are already assessed, you can request abatement for reasonable cause. Relief is not automatic, so a well-documented explanation matters.

Form 5472 is the federal information return. It is not always the only filing.

• Owner's US income tax return. If the LLC has income effectively connected with a US trade or business, the foreign owner may need to file Form 1040-NR (individuals) or Form 1120-F (foreign corporations). A software founder selling from abroad with no US office or employees often has no effectively connected income, but this depends on facts; get advice.
• State filings. Your formation state has its own annual tax or report. Delaware LLCs, for example, pay a $400 annual tax by June 1. If the LLC does business in California, it owes California's $800 annual tax and files Form 568.
• Beneficial ownership. FinCEN's final rule, effective August 14, 2026, exempts US-formed companies from BOI reporting, so a domestic LLC owned by a foreign person no longer files a BOI report with FinCEN. Foreign entities registered to do business in the US still report non-US owners.

If you plan to raise money from US investors, a Delaware C corp is usually the better long-term structure, and a C corp more than 25% foreign-owned still files Form 5472 with its regular Form 1120. This is general guidance, not tax advice for your specific facts.