A foreign founder registers a single-member LLC in Wyoming, wires in $10,000 of startup capital, and does nothing else all year. No customers, and no US bank activity beyond that one transfer.
That LLC has a Form 5472 obligation, and the penalty for missing it is $25,000. So does any US corporation that is 25% foreign-owned, and any foreign corporation carrying on a US trade or business.
The wire is the trigger. Contributions to the entity are reportable transactions, so the capital that started the company is itself the thing that creates the filing.
TL;DR
- Three kinds of filer: a 25% foreign-owned US corporation, a foreign corporation engaged in a US trade or business, and a foreign-owned US disregarded entity.
- Form 5471 is the opposite form. It covers a US person owning a foreign corporation, not a foreign person owning a US one.
- The disregarded entity rule is the one most founders hit. Since 2017 a foreign-owned single-member LLC files even with no income and no tax return obligation of its own.
- It files a pro forma Form 1120 with Form 5472 attached, completing only the name, address and two items on page one.
- Contributions and distributions count. Funding your own LLC is a reportable transaction, which is why a dormant entity still files.
- A disregarded entity cannot e-file. The return goes by fax or mail to a dedicated IRS unit in Ogden.
- The penalty is $25,000, and a second $25,000 runs for each 30-day period once the IRS has given notice and 90 days have passed.
- A worked six-step example below runs a first-year Wyoming LLC from EIN application through to the fax.
- The same $25,000 applies to a records failure, which is a separate obligation from the filing itself.
- Three of the six exceptions are closed to disregarded entities outright, and the one that is open requires Part V to be empty too.
What Form 5472 Is For
Form 5472 is an information return, not a tax return. It calculates no liability and produces no refund. Its job is to give the IRS visibility into money moving between a US entity and the foreign parties connected to it.
The form provides the information required under sections 6038A and 6038C when reportable transactions occur during the tax year between a reporting corporation and a foreign or domestic related party. It answers three questions:
- Who owns the US entity, and how much of it
- Which related parties it dealt with during the year
- What kinds of transactions passed between them, and in what amounts
Where a US subsidiary buys from its foreign parent, the price is set inside the group. Form 5472 is how the IRS sees the volume and category of those dealings before deciding whether transfer pricing needs a closer look.
Who Has to File Form 5472
Whether an entity is a corporation, a partnership or disregarded decides which row below it lands in. Our guide to US entity types and tax classifications covers how that classification is set.
A reporting corporation is defined as either a 25% foreign-owned US corporation, including a foreign-owned US disregarded entity, or a foreign corporation engaged in a trade or business within the United States.
A 25% Foreign-Owned US Corporation
Someone counts as a 25% foreign shareholder if they own, directly or indirectly, at least 25% of either measure:
- The total voting power of all classes of stock entitled to vote
- The total value of all classes of stock
Either test alone is enough. A shareholder holding 30% of value with no voting rights meets the definition, as does one holding 25% of the votes on a small slice of the equity.
The test is applied at any point during the tax year, so a shareholder who crossed 25% in March and sold down in November was a 25% foreign shareholder for that year. Ownership at year end is not the measure.
A Foreign Corporation Engaged in a US Trade or Business
Carrying on a US trade or business makes a foreign corporation a reporting corporation in its own right, separate from the ownership test. It attaches Form 5472 to its Form 1120-F, where our guide covers the return itself and its own deadlines.
A Foreign-Owned US Disregarded Entity
A US entity that is disregarded for tax purposes and wholly owned by a foreign person is treated as a corporation solely for section 6038A purposes. In practice this means the single-member LLC that foreign founders use most often.
Form 5472 vs Form 5471: Which One Applies to You
The two forms are routinely confused, and they run in opposite directions.
| Form 5472 | Form 5471 | |
|---|---|---|
| Who files | A US entity that is foreign-owned, or a foreign corporation in a US trade or business | A US person who owns or controls a foreign corporation |
| Direction | Foreign money into a US entity | US ownership of a foreign entity |
| Reports | Transactions with related parties | The foreign corporation's income, earnings and ownership |
Someone abroad who owns a US LLC is in 5472 territory. A US person who has set up a company abroad is in 5471 territory, and our guide to who must file Form 5471 covers that side.
The Single-Member LLC Rule Catches Most Foreign Founders
The LLC files Form 5472 even with no income and no tax return of its own. Funding the entity is itself a reportable transaction, which is why a dormant LLC is still a filer.
Since 2017, a Foreign-Owned Single-Member LLC Has Had to File
The rule applies for tax years beginning on or after 1 January 2017 and ending on or after 13 December 2017.
Final regulations under section 6038A treat a foreign-owned US disregarded entity as an entity separate from its owner, classified as a corporation for the limited purposes of the section 6038A requirements.
Disregarded status survives for every other federal tax purpose. Its income still flows to the owner, and it still files no income tax return of its own.
You File a Pro Forma Form 1120, Not a Tax Return
The mechanism is a pro forma Form 1120 with Form 5472 attached, due by the due date of that Form 1120 including extensions.
The pro forma return is close to empty:
- Complete only the name and address of the disregarded entity, plus items B and E on the first page
- Write "Foreign-owned U.S. DE" across the top of the Form 1120
- Attach Form 5472 and leave the income and deduction lines alone
The LLC Needs Its Own EIN Before It Can File
An EIN of its own is required before the entity can file, even though it has no separate tax return obligation. On Form SS-4, check the Other box on line 9a and write "Foreign-owned U.S. disregarded entity-Form 5472".
Discovering the obligation in early April means applying for a number and preparing a filing in the same few weeks.
Who Counts as a Related Party
A reportable transaction only exists if the counterparty is a related party, so the definition sets the boundary of the whole filing.
A transaction is only reportable if the counterparty is one of these:
- Any direct or indirect 25% foreign shareholder of the reporting corporation
- Any person related under section 267(b) or 707(b)(1) to the reporting corporation
- Any person related under those same sections to a 25% foreign shareholder
- Any other person related to the reporting corporation under section 482
Indirect Ownership Is Attributed to You
Ownership is tested with the section 318 attribution rules, modified for this purpose. Stock held by family members or by entities you control can be attributed to you.
In applying section 318(a)(2)(C), 10% is substituted for 50%, so ownership attributes upward from a corporation at a much lower stake than the general rule requires.
What "Foreign Person" Means
The term covers an individual who is not a US citizen or resident, and an entity not created or organized in the United States. It also reaches a foreign estate or trust, and a foreign government engaged in commercial activity.
An individual with an effective joint return election under section 6013(g) or (h) is outside the definition, which is the narrow case where a non-resident spouse electing to be treated as a US resident drops out of the related-party analysis.
What Counts as a Reportable Transaction
Form 5472 reports dealings between the reporting corporation and its foreign related parties. The form splits them across three parts, and the split decides who qualifies for an exception later.
| Part | What it captures | Examples |
|---|---|---|
| IV | Transactions where monetary consideration was the sole consideration paid or received | Sales, purchases, rents, royalties, interest, commissions |
| V | Other transactions of a foreign-owned disregarded entity | Formation, dissolution, acquisition, disposition, contributions to and distributions from the entity |
| VI | Transactions with a foreign related party where non-monetary or less-than-full consideration applied | Property exchanges, barter arrangements |
What Part IV Reports: Sales, Rents, Royalties, Interest and Loans
Part IV lists the transaction types where money was the only consideration, and the categories are broader than a sales ledger:
- Sales and purchases of stock in trade and of tangible property other than stock in trade
- Rents and royalties paid or received
- Interest paid or received
- Consideration for technical, managerial, engineering, construction, scientific or similar services
- Commissions paid or received
- Amounts borrowed and loaned, and premiums for insurance or reinsurance
Management fees charged by a foreign parent to its US subsidiary sit in the services line, and intercompany loans appear on both the interest and the borrowing lines.
Why Funding Your Own LLC Is Reportable
Part V covers amounts paid or received in connection with the formation, dissolution, acquisition and disposition of the entity, including contributions to and distributions from it.
A founder who wires startup capital into their own LLC has made a contribution. So has one who pays a formation agent from personal funds on the entity's behalf, or who takes money back out later.
The practical effect: a foreign-owned single-member LLC with no customers and no revenue can still have a reportable transaction in its first year, because the act of funding it is one.
Form 5472 Filing Requirements
The filing requirements for Form 5472 break into five questions:
- Which return it attaches to, and when that return is due
- How many forms you file
- What each one reports
- How it gets submitted
- How to extend the date if you need to
Which Return It Attaches To, and When It Is Due
The form is never filed on its own. It attaches to the reporting corporation's income tax return and is due by that return's due date, including extensions.
| Filer | Attaches to | Due date, calendar year |
|---|---|---|
| 25% foreign-owned US corporation | Form 1120 | 15 April |
| Foreign-owned US disregarded entity | Pro forma Form 1120 | 15 April |
| Foreign corporation in a US trade or business | Form 1120-F | 15 April with a US office, 15 June without |
File a Separate Form for Each Related Party
A separate Form 5472 is required for each foreign or US person who is a related party with which the reporting corporation had a reportable transaction.
Four related parties means four forms, all attached to the one return. The continuation penalty is priced per related party for the same reason.
What Each Form 5472 Asks For, Part by Part
| Part | Reports |
|---|---|
| I | The reporting corporation: address, total assets, principal business activity, and the value of transactions |
| II | The two largest direct 25% foreign shareholders and the two largest ultimate indirect 25% foreign shareholders, with ownership percentages |
| III | The related party for this form: identification numbers, reference ID, and its relationship to the corporation |
| IV to VI | The reportable transactions themselves, split by type |
Parts I and II repeat on every form in the set. Part III and the transaction parts change from one related party to the next.
Extending With Form 7004
Form 7004 extends the filing date, and a disregarded entity enters the Form 1120 code on it even though no Form 1120 income tax return exists:
- File Form 7004 by the regular due date of the return
- Because the 5472 attaches to a pro forma Form 1120, enter the code for Form 1120 on Form 7004, Part I, line 1
- The extension moves the filing date only, so any tax due on an actual return is still payable on the original date
How to Submit It: Fax or Mail, Never E-File
A foreign-owned US disregarded entity cannot file Form 5472 electronically. The pro forma 1120 and the attached 5472 go to a dedicated IRS unit by one of two routes:
- Fax at 300 DPI or higher to 855-887-7737
- Mail to Internal Revenue Service, 1973 Rulon White Blvd, M/S 6112, Attn: PIN Unit, Ogden, UT 84201
Filers submitting a real Form 1120 or 1120-F attach the 5472 to that return and follow the return's own filing method.
The $25,000 Penalty, and the One That Keeps Running
A penalty of $25,000 is assessed on a reporting corporation that fails to file Form 5472 when due and in the manner prescribed. Filing late counts, and so does filing incompletely.
A Second $25,000 Repeats Every 30 Days After Notice
Where the failure continues for more than 90 days after IRS notification, an additional $25,000 applies. That second charge repeats for each related party and for each 30-day period, or part of one, that the failure continues past the 90 days.
| Stage | Amount | Repeats? |
|---|---|---|
| Failure to file when due | $25,000 | Once, per reporting corporation |
| Continuing past 90 days after notice | $25,000 | Per related party, per 30-day period |
Consolidated Groups Multiply the Exposure
Each member of a group filing a consolidated information return is a separate reporting corporation with its own $25,000, and members are jointly and severally liable for it.
A First-Year Foreign-Owned LLC, Step by Step
Take the Wyoming LLC from the opening: one foreign member, formed in March, funded with $10,000 in April, on a calendar tax year. No revenue.
| Step | What happens | When |
|---|---|---|
| 1 | Apply for an EIN on Form SS-4, line 9a marked Other with "Foreign-owned U.S. disregarded entity-Form 5472" | As early as possible |
| 2 | Identify the reportable transactions. Formation costs and the $10,000 contribution are Part V items | At year end |
| 3 | Prepare the pro forma Form 1120: name, address, items B and E, "Foreign-owned U.S. DE" across the top | Before 15 April |
| 4 | Attach one Form 5472 per related party, here the single foreign member | Before 15 April |
| 5 | Fax to 855-887-7737 or mail to the Ogden PIN Unit. No e-filing | By 15 April |
| 6 | Keep the wire confirmation, formation invoices and any member agreement | Ongoing |
Nothing in that sequence involves calculating tax. The entity owes none, and the $25,000 is charged for the missing paperwork.
When a Dormant LLC Genuinely Has Nothing to Report
An LLC formed in a prior year, already funded, with no contributions or distributions and no dealings with its owner during the tax year, may have no reportable transaction for that year.
That is a fact question and it turns on whether anything at all moved between the entity and a related party, including expenses paid on the entity's behalf by the owner. Registered agent fees settled from a personal account are a transaction.
Section 6038A Also Requires You to Keep the Records
Section 6038A carries a records requirement separate from the filing. A reporting corporation must keep the permanent books of account or records required by section 6001, sufficient to establish the correctness of its federal income tax return.
The $25,000 penalty applies to a failure to maintain records as well as to a failure to file, and the same continuation charge applies where the failure persists past 90 days after IRS notification.
For a foreign-owned LLC, that generally means keeping:
- The wire confirmations behind every contribution and distribution
- Formation invoices and registered agent billing, including anything paid from a personal account
- Any intercompany agreement between the entity and its owner
Reasonable Cause Relief, and What to Do About Unfiled Years
Relief is available under Regulations section 1.6038A-4(b) where the failure is shown to be due to reasonable cause and not wilful neglect. The Form 5472 instructions do not mention it, so the showing has to be made affirmatively, with a statement supporting it.
A founder discovering several unfiled years is looking at a separate $25,000 per year per related party on the face of the rules, which is why this is a situation to take to a US tax professional before filing anything.
Form 5472 Exceptions: When You Do Not Have to File
A reporting corporation is not required to file where any of these applies. Each carries its own conditions, and three of the six are closed to disregarded entities outright.
| # | Exception | Open to a foreign-owned DE? |
|---|---|---|
| 1 | No reportable transactions of the types in Parts IV and VI and, for a foreign-owned DE, none of the type in Part V | Yes, but Part V must also be empty |
| 2 | A US person controlling the foreign related corporation files Form 5471 with a completed Schedule M showing all reportable transactions | No |
| 3 | The related corporation qualifies as a foreign sales corporation and files Form 1120-FSC | No |
| 4 | A foreign corporation with no permanent establishment under an applicable treaty that timely files Form 8833 | Not applicable |
| 5 | A foreign corporation whose gross income is entirely exempt under section 883, that timely and fully complies with the reporting requirements of sections 883 and 887 | Not applicable |
| 6 | Both parties are non-US persons and the transactions generate no US-source or effectively connected income, and no deduction allocable to it | No |
Two of these are conditional on a filing of their own. Exception 4 requires Form 8833 to be filed on time, and exception 5 requires compliance with the sections 883 and 887 reporting, so neither is a matter of simply meeting a description.
Why a Foreign-Owned LLC Rarely Qualifies
Exceptions 2, 3 and 6 carry an express note that they do not apply to foreign-owned US disregarded entities. Exceptions 4 and 5 are written for foreign corporations, not for a US LLC.
That leaves exception 1, and its own text requires a foreign-owned DE to have had no Part V transaction either. Because formation and funding are Part V items, an LLC that received startup capital has already failed it.
Mistakes That Trigger the Penalty
Assuming a Dormant LLC Files Nothing
A foreign-owned single-member LLC with no revenue has no income tax return to file, which is where the assumption comes from. The section 6038A obligation runs separately and is not switched off by the absence of income.
Waiting Until the Income Tax Deadline to Get the EIN
The entity needs its own EIN, and the application is not instant for a foreign responsible party. Starting in April for an April deadline leaves no margin.
E-Filing the Pro Forma Return
The disregarded entity route is fax or mail only. A filing pushed through an e-file channel may not land where the instructions require. The penalty attaches to failing to file in the manner prescribed, which is a separate trigger from lateness.
Counting Only Cash Sales as Transactions
An invoice-and-payment review catches Part IV and stops there. Two whole categories sit outside it:
- Part V: formation, dissolution, contributions and distributions
- Part VI: non-monetary exchanges and less-than-full consideration
How FinStackk Helps With Form 5472
FinStackk is an accounting and tax compliance platform for US businesses, built for founders running a US entity from outside the country.
Fin-Start covers US incorporation and EIN registration, and Fin-Tax handles federal filings with a consolidated deadline calendar and automatic extension filing. Our team includes CPAs, CAs and EAs, and every client gets a dedicated SPOC, a single point of contact in-house.
Get in touch to talk through your filing position.
Frequently Asked Questions
What are the filing requirements for Form 5472?
Attach it to the reporting corporation's income tax return, file one form per related party, and meet that return's due date including extensions. For a foreign-owned disregarded entity the return is a pro forma Form 1120 due 15 April.
Submission differs by filer. A real Form 1120 or 1120-F carries the 5472 through that return's normal channel; a disregarded entity must fax or mail it.
Does a foreign-owned LLC with no income file Form 5472?
Generally yes, where there was any reportable transaction. Funding the entity is itself a Part V transaction, so a first-year LLC that received startup capital and did nothing else still has a filing to make.
What is the deadline for Form 5472?
It follows the return it attaches to. For a foreign-owned disregarded entity filing a pro forma Form 1120, that is 15 April for a calendar-year entity, extendable with Form 7004.
Can Form 5472 be filed electronically?
A corporation filing a real Form 1120 or 1120-F attaches it to that return and files as normal. A foreign-owned disregarded entity cannot, and files by fax or mail to the Ogden address instead.
This article is general information on US federal information reporting and is not tax or legal advice. Rules change and individual facts matter, so confirm your position with a qualified professional before acting.