Form 5472 for foreign-owned LLCs: the $25,000 mistake

Who this applies to

Any U.S. LLC with one owner who is not a U.S. person — an individual abroad or a foreign company. Since 2017 the IRS treats such an LLC as a corporation for this one purpose, which means it must file Form 5472 attached to a pro-forma Form 1120 every year.

What the form reports

Transactions between the LLC and its foreign owner: capital contributions, distributions, loans, payments for services, reimbursements. Even a $500 capital contribution to open the bank account is a reportable transaction. "No activity" does not mean no filing.

The penalty

$25,000 per form per year, and it is assessed automatically. A company that has existed for four years without filing is looking at $100,000 before any tax is computed. The IRS has been issuing these penalties by mail with increasing regularity.

What you need

An EIN for the LLC (we obtain it without an SSN), the owner's identifying number — an ITIN, or a foreign tax ID accepted on the form — and a record of every transaction between owner and company. The filing is due April 15, with an extension to October 15 available.

If you have missed years

File them now, with a reasonable-cause statement. Penalties are frequently abated on a first, voluntary correction when the statement is specific and the filings are complete. Waiting for the notice is the expensive path.

Beyond 5472

Depending on activity, the LLC or the owner may also owe a full 1120, a 1040-NR, state returns and franchise tax, and sales tax. The 5472 is the floor, not the whole picture. We map the full set on the first call.

This article is general information, not advice for your situation. Facts and thresholds change; confirm before acting.