Form 5472: The $25,000 Form Every Foreign-Owned US LLC Must File

Since 2017 a US single-member LLC that is disregarded for tax and is owned by a foreign person is treated as a corporation for information reporting. It must file Form 5472, attached to a pro-forma Form 1120, for every year in which it has a reportable transaction with its owner or a related party. Forming the LLC and funding it is itself a reportable transaction, so in practice every foreign-owned single-member LLC files every year.

Multi-member LLCs owned by foreign persons file Form 1065 instead, with K-1s and possibly withholding under Section 1446. US corporations with a 25 percent foreign shareholder file Form 5472 with their regular Form 1120.

Transactions between the LLC and its foreign owner or related parties: capital contributions, distributions, loans in either direction, payments for services, rent, royalties, sales and purchases. Amounts are reported in US dollars by category. The form also identifies the owner, the owner's country of residence and any other related party involved.

Nothing on the form creates a tax liability by itself. It is disclosure, designed so the IRS can see money moving between a US entity and a foreign owner.

The LLC needs an EIN, obtained on Form SS-4 by fax or phone where the owner has no SSN. Form 5472 is attached to a pro-forma Form 1120 that carries only the LLC's name, address, EIN and a checkbox indicating it is filed for a foreign-owned disregarded entity; the income lines are left blank. The package is due by 15 April for a calendar-year LLC, extendable to 15 October on Form 7004. It cannot be e-filed in most software and is usually mailed or faxed to the IRS's Ogden service centre.

$25,000 for each Form 5472 not filed, filed late or filed incomplete, per year, with a further $25,000 for each 30-day period of continued failure after IRS notice. There is no income threshold and no small-business exception. The penalty is assessed automatically when a late return is received, and most foreign owners first learn of the requirement when the assessment arrives.

File the missed years now, each with a reasonable-cause statement. Where the IRS has not yet assessed, first-time penalty abatement is often available for the first year, and reasonable cause based on reliance on a formation agent who never mentioned the form has succeeded in many cases. Where penalties have been assessed, an abatement request is still worth making. The one thing that never works is continuing not to file.

The LLC may also need a state annual report and franchise tax, a state income tax return if it has nexus, sales tax registration where it sells, and, if it has US-source income effectively connected with a US trade or business, the owner may need to file Form 1040-NR. Since March 2025, US-formed LLCs are exempt from FinCEN beneficial ownership reporting; foreign companies registered to do business in a state are not. And the owner's home country will tax the LLC's profit: the UK as the owner's trading income, the UAE within corporate tax if the owner is a company or a natural person with business turnover over AED 1 million.