Form 5472 is an information return. It does not calculate any tax and it does not ask what your company earned. It tells the IRS about transactions between a U.S. company and the foreign people or companies related to it.
Most founders outside the United States meet this form in the worst possible way. They set up a single-member LLC, they read that a single-member LLC is "disregarded" for tax, and they conclude that there is nothing to file. There is usually one thing to file. If it is not filed, the penalty is $25,000 for that tax year, and it applies whether the company made a profit or made nothing at all. What triggers the form is a reportable transaction with a related party, and the money you spent forming the LLC and the money you moved in and out of it are exactly that.
The reason so many people get this wrong is that the trigger has nothing to do with your own tax status. It is about who owns the company. A U.S. company owned entirely by U.S. persons is outside this rule. The same company with a foreign owner is inside it.
What the rule actually requires
The rule comes from 26 U.S.C. § 6038A. It applies to what the statute calls a reporting corporation, and it reaches two kinds of entities.
1. A domestic corporation that is at least 25% foreign-owned. If a foreign person owns 25% or more of the corporation, the corporation is a reporting corporation. Section 6038C extends the same reporting duty to certain foreign corporations that are engaged in a trade or business in the United States.
2. A foreign-owned U.S. disregarded entity. This is the one that catches founders. The statute itself speaks only of corporations. The regulations under it (26 CFR § 1.6038A-1(c)(1)) pull in disregarded entities: a single-member LLC is normally ignored for tax purposes, so its owner reports its income directly, but a U.S. disregarded entity with a foreign owner is treated as a corporation for this reporting rule, and it has to file.
The form is required when the entity had reportable transactions with a related party during the year. The IRS instructions define which transactions count, so read them before you decide that nothing happened in your company. If there were genuinely none, the instructions list that as an exception from filing. For a foreign-owned disregarded entity the net is wide, because Part V of the form also captures amounts paid or received in connection with the formation, dissolution, acquisition and disposition of the entity, including contributions to it and distributions from it.
Where the form is filed
Form 5472 is never filed by itself. It is attached to the company's income tax return, and it is due when that return is due, including extensions.
- A corporation attaches Form 5472 to its Form 1120.
- A foreign-owned single-member LLC has no income tax return of its own, because it is disregarded. So the IRS built a workaround. The LLC files a pro forma Form 1120 whose only job is to carry the Form 5472. Per the IRS instructions, the only information required on that Form 1120 is the entity's name and address plus Item B and Item E on the first page. You write "Foreign-owned U.S. DE" across the top. You do not report income on it.
A foreign-owned disregarded entity cannot file this electronically. The IRS instructions give two channels: fax it to 855-887-7737, or mail it to the Ogden, Utah address they list. It does not go with your personal return.
If you need more time, you file Form 7004 by the due date of the return, not counting extensions. That extends the return, and the Form 5472 attached to it moves with it.
How the penalty grows
The penalty under § 6038A(d) is $25,000 for each tax year in which the failure occurs. Note what it is charged for. It applies both to failing to file the form and to failing to keep the records the rule requires.
If you do not fix the failure after the IRS notifies you, it gets worse. Once 90 days have passed since the notice, an additional $25,000 is added for each 30-day period, or part of a period, that the failure continues. Read one more clause before you do the arithmetic. Both the IRS instructions and 26 CFR § 1.6038A-4 charge that continuing penalty with respect to each related party for which a failure occurs. If a company failed to report three related parties, the additional penalty is counted three times for each 30-day period, not once.
Here is the arithmetic for the simplest case, a single related party. Say the IRS sends the notice and you file 100 days later. That is 10 days past the 90-day mark, which is part of a 30-day period, so one more $25,000 is added. The total is $25,000 + $25,000 = $50,000.
Now say you file 160 days after the notice. That is 70 days past the mark. Seventy days covers two full 30-day periods and part of a third, so three additional charges apply. The total is $25,000 + (3 × $25,000) = $100,000.
Both totals assume one related party. With more than one, the post-notice amount is charged again for each of them. The statute sets no cap on how long the 30-day charges continue.
This is why the form matters more than its size suggests. The pro forma return is close to blank, and the price of not sending it is not.
🇺🇸 If the IRS counts you as a U.S. person
Your ownership is not foreign ownership, so your own stake never triggers this form.
- If you are the sole owner of a U.S. single-member LLC, the LLC has no Form 5472 obligation. You report the LLC on your own return and stop there.
- If your company is a corporation and a foreign person owns 25% or more of it, the corporation is a reporting corporation and it files Form 5472 with its Form 1120. The corporation files, not the foreign owner.
- Watch what happens when you bring in an investor or a co-founder who lives abroad. Crossing the 25% line changes the corporation's filing duties for that year. It does not change yours.
Remember that "foreign person" here is a tax question, not a passport question. If the IRS counts an owner as a U.S. person, that owner is not foreign for this test, whatever their citizenship. The two tests that decide it are on our U.S. person page.
🌏 If it does not
Assume the form applies to you and work from there.
If you own a U.S. LLC on your own, you are a foreign owner of a U.S. disregarded entity. That is exactly the case the § 6038A regulations reach. So for any year in which the LLC had a reportable transaction, you file:
- A pro forma Form 1120, with the name and address, Item B and Item E filled in, marked "Foreign-owned U.S. DE" across the top.
- Form 5472 attached to it, reporting the transactions between you and the LLC and any other related parties.
Three points that people miss.
- This is separate from your personal return. If you also file a Form 1040-NR, that return does not carry your LLC's Form 5472. The entity's filing and the owner's filing are two different obligations, and they do not even go to the same place.
- No profit does not mean no filing. Form 5472 reports transactions, not income. Money you put into the LLC and money you take out of it are reportable transactions with a related party.
- You cannot e-file it. A foreign-owned disregarded entity sends the pro forma Form 1120 and its Form 5472 by fax or by mail to the address in the IRS instructions. The deadline is the Form 1120 due date, and it moves only if you file Form 7004 on time.
Where the two lanes go
| 🇺🇸 U.S. person | 🌏 Not a U.S. person | |
|---|---|---|
| Your single-member LLC, you as the only owner | Not a filer. No Form 5472 | Filer in any year with a reportable transaction |
| Corporation where a foreign person owns 25% or more | Filer. The corporation files | Filer. The corporation files |
| What the form is attached to | The corporation's real Form 1120 | A pro forma Form 1120: name, address, Item B, Item E |
| How it is sent | With the corporation's return | Fax or mail only. No e-filing |
| Does a year with no profit excuse you | No | No |
| Deadline | The return's due date, extensions included | The same, extended with Form 7004 |
| Penalty for missing it | $25,000 for the tax year | $25,000 for the tax year |
| After an IRS notice goes unanswered 90 days | +$25,000 per 30-day period, per related party | +$25,000 per 30-day period, per related party |
Read the table from the ownership side, not from your side. The last four rows are identical in both lanes, because once an entity is a reporting entity, the deadline and the penalty do not care who owns it. What differs is only whether you are pulled in at all.
Common mistakes
🇺🇸 If the IRS counts you as a U.S. person
- Adding a co-founder or investor who lives abroad, and not checking whether the foreign stake reached 25%. The corporation's duty starts at that line.
- Assuming that because the corporation is small, the reporting rule is aimed at bigger companies. The statute sets an ownership percentage, not a revenue threshold.
- Filing the corporation's Form 1120 on time but leaving out the Form 5472 that should have been attached to it. The form is late even though the return was not.
🌏 If it does not
- Reading "a single-member LLC is disregarded, so there is nothing to file" and stopping there. That sentence is about income tax. Form 5472 is not income tax.
- Waiting until the LLC earns money before filing anything. The form reports transactions, and a year with no revenue can still have transactions with you.
- Missing the deadline because you thought it was the personal tax deadline you already knew. Check the due date of the return the form attaches to, and file Form 7004 if you need more time.
- Ignoring the first IRS notice. The 90-day clock in § 6038A(d) starts when the notice goes out, and after that the amount grows every 30 days.
FAQ
My LLC earned nothing this year. Do I still have to file Form 5472?
Probably. The form is triggered by reportable transactions with a related party, not by income. Money you contributed to the LLC and money you withdrew from it are reportable transactions between the LLC and its foreign owner, and so are amounts paid or received in connection with forming the entity. A year with zero revenue can still be a year with reportable transactions. The IRS instructions do list an exception for an entity that had none at all, but read Part V of the form before you decide you are in it.
Who counts as a "foreign person" for the 25% test?
It is a tax question, not a nationality question. An individual whom the IRS counts as a U.S. person is not a foreign person for this rule, even if they hold another country's passport. An individual whom the IRS does not count as a U.S. person is foreign. Our U.S. person page has the two tests that decide it.
I already file Form 1040-NR. Isn't my LLC covered by that?
No. Form 1040-NR is your personal return. Form 5472 is filed by the entity and attached to a Form 1120, including the pro forma Form 1120 used by a foreign-owned single-member LLC. They are two separate obligations with two separate documents, and the entity's package goes to a separate IRS channel by fax or mail.
What exactly goes on a pro forma Form 1120?
Much less than a real one. Per the IRS instructions, the only information required is the entity's name and address plus Item B and Item E on the first page. You write "Foreign-owned U.S. DE" across the top. You do not report income on it. Its purpose is to be the return that Form 5472 is attached to.
Can I get an extension?
Yes. You file Form 7004 by the due date of the return, not counting extensions. That extends the return, and the Form 5472 attached to it is then due on the extended date. Form 7004 has to be filed on time to work.
How exactly does the $25,000 penalty grow?
The base penalty under § 6038A(d) is $25,000 for the tax year. If the IRS sends a notice and the failure continues for more than 90 days after it, an extra $25,000 applies for every 30-day period, or part of a period, after that. So a failure that continues 70 days past the 90-day mark picks up three additional charges, because 70 days covers two full periods and part of a third. With one related party that is $100,000. The continuing penalty is charged with respect to each related party for which a failure occurs, so a company that failed to report several related parties multiplies that figure, and nothing in the statute caps how long it runs.
Does the penalty apply only to not filing the form?
No. Section 6038A(d) charges the same $25,000 for failing to keep the records the rule requires, not only for failing to send the form. Keeping records of your transactions with the LLC is part of the obligation.
Does this apply to a multi-member LLC?
Form 5472 reaches corporations that are at least 25% foreign-owned and U.S. disregarded entities with a foreign owner. A single-member LLC is a disregarded entity by default. An LLC with more than one member is not, so it files a different return by default. Confirm how your LLC is classified for tax before deciding which rule applies to it.