Form 5472 for a foreign-owned US LLC or subsidiary: who files and the $25,000 penalty

Two kinds of US company file: a 25% foreign-owned corporation and a wholly foreign-owned LLC

The IRS instructions define a reporting corporation as a 25% foreign-owned US corporation, including a foreign-owned US disregarded entity. A corporation is 25% foreign-owned when a foreign person holds, directly or indirectly, at least 25% of its voting power or of its stock value at any time during the year. A foreign-owned US disregarded entity is a domestic LLC or other disregarded entity wholly owned by a foreign person.

Since 2017, the IRS treats a foreign-owned disregarded entity as a separate corporation for this one reporting rule, even though it is disregarded for income tax. That is why a single-member LLC owned by someone living abroad has to file even though it owes no income tax return.

Loans, fees and owner funding are reportable transactions

A reportable transaction is one with a foreign or domestic related party of the kinds listed on the form. The related party includes the 25% foreign shareholder and people related to it. The form's monetary lines include amounts borrowed, interest paid, rents, royalties, consideration for managerial or other services, commissions, purchases and sales, and other amounts paid or received. For a foreign-owned LLC, Part V adds amounts paid or received for forming, dissolving, acquiring or disposing of the entity, including contributions to it and distributions from it.

If the company had no reportable transactions of the listed types, it does not file for that year. File one Form 5472 for each related party with which it had a reportable transaction. A company that uses the accrual method must report accrued payments and receipts, not only cash that moved.

A foreign-owned LLC files a pro forma Form 1120 with Form 5472 attached

Bright Labs LLC is a Delaware LLC wholly owned by Maria, a resident of Brazil. In 2026 she contributes $40,000, lends the LLC $20,000 at 5% and is paid $3,000 for consulting. Bright Labs files a pro forma Form 1120 and a Form 5472 for calendar 2026 by April 15, 2027, or by October 15, 2027 with a Form 7004 extension.

1. 1

   Step 1: Get an employer identification number for the LLC. Part I of Form 5472 asks for it.

2. 2

   Step 2: Use the tax year of the owner's US return, or the calendar year if the owner has none.

3. 3

   Step 3: Prepare a Form 1120 and fill in only the name and address and items B and E on page 1. Write Foreign-owned U.S. DE across the top.

4. 4

   Step 4: Prepare a Form 5472 for each related party with a reportable transaction, and attach a statement for the Part V transactions.

5. 5

   Step 5: Fax the package to 855-887-7737, or mail it to the dedicated Ogden, Utah address in the IRS instructions. Do not use the usual Form 1120 address.

6. 6

   Step 6: To extend, send Form 7004 by the regular due date to the same place, marked Foreign-owned U.S. DE. It extends the time to file by six months.

7. 7

   Step 7: Keep permanent books and records that support every reported transaction.

A corporation attaches Form 5472 to its regular Form 1120 by the return's due date, which is the 15th day of the fourth month after year-end, April 15 for calendar-year companies. It files electronically with the return.

The penalty is $25,000 per form, and it grows after an IRS notice

The instructions set a $25,000 penalty on any reporting corporation that fails to file Form 5472 when due and in the required manner. The same penalty applies to failing to keep the required records. A substantially incomplete form counts as a failure to file.

If the failure continues for more than 90 days after the IRS notifies you, an additional $25,000 applies for each related party, for each 30-day period or part of one during which the failure continues. Criminal penalties can also apply for failing to submit information or filing false information.

With two related parties, each needs its own form, and each form carries its own penalty.

Tag owner transactions all year so the form is easy to fill in

• Record every wire from or to the foreign owner as a contribution, a distribution, a loan or a payment for services, never as a generic transfer.
• Keep the owner's loans in their own account with a note, and accrue the interest each month.
• Keep an accrual-basis ledger, since the IRS wants accrued payments, and export the general ledger at year-end for your CPA.
• Start the form early: a first-time filer checks the initial year box, and a late wire in December still belongs in this year's return.
• Use a CPA who files for foreign-owned companies, and confirm the current fax number and address in the instructions each year.

For a wider view of deadlines a US startup owes, see startup tax deadlines.