Form 5472 for Foreign-Owned LLCs: Complete Filing Guide

Understanding the Form 5472 requirements that apply to foreign-owned single-member LLCs and disregarded entities since the 2017 expansion

Quick Facts:

2017 Year disregarded entities became subject to Form 5472
$25,000 Penalty per form for non-compliance
Zero activity Still requires filing
Paper filing Required for foreign-owned DEs

Introduction: The 2017 Expansion That Changed Everything

Before 2017, Form 5472 requirements applied only to corporations. The Tax Cuts and Jobs Act changed this dramatically by expanding Form 5472 to include all foreign-owned disregarded entities—including single-member LLCs.

This expansion affects thousands of foreign investors who own U.S. real estate through LLCs, operate e-commerce businesses, or hold investments in single-member LLC structures. For a comprehensive overview of Form 5472, see our Complete Guide to Form 5472 for Foreign-Owned U.S. Businesses.

Critical Misconception: Many foreign LLC owners believe that “disregarded for tax purposes” means they have no filing requirements. This is incorrect. The IRS specifically requires Form 5472 from all foreign-owned disregarded entities, even those with zero income or activity.

2025 OBBBA Update: The One Big Beautiful Bill Act (effective 2026) introduces new requirements affecting foreign-owned LLCs: a 1% remittance tax on certain cross-border transfers, enhanced FTIN (foreign taxpayer identification number) requirements, and updated FinCEN beneficial ownership reporting. These changes increase compliance complexity for foreign-owned disregarded entities.

What is a Disregarded Entity?

A disregarded entity is a business structure that the IRS treats as not separate from its owner for federal income tax purposes. The most common example is a single-member LLC.

How Disregarded Entities Are Taxed

The entity itself does not file an income tax return
All income and expenses flow through to the owner’s personal tax return
The LLC provides liability protection while maintaining tax simplicity

Why “Disregarded” Does NOT Mean “Ignored”

While a single-member LLC may be disregarded for income tax purposes, it is very much recognized for:

Form 5472 information reporting
Employment tax obligations
Excise tax requirements
State tax purposes

Who Must File Form 5472 as a Foreign-Owned DE?

Direct Foreign Ownership

Any single-member LLC where the sole owner is:

A foreign individual (non-U.S. person)
A foreign corporation
A foreign partnership
A foreign trust or estate
Any other foreign entity

Indirect Foreign Ownership

Form 5472 requirements can also apply when:

A foreign entity owns a U.S. corporation that owns a single-member LLC
Multiple tiers of entities result in ultimate foreign ownership
Attribution rules create foreign ownership status

Common Scenarios Requiring Filing

Real Estate Investment: A Canadian citizen purchases a rental property in Florida through a single-member LLC. Even if the property generates no rental income, the LLC must file Form 5472.

E-commerce Business: A UK entrepreneur operates an Amazon business through a Wyoming LLC. Every reportable transaction with related parties requires Form 5472 reporting.

Holding Company: A German company owns a Delaware LLC to hold U.S. investments. The LLC must file annually, reporting all transactions with its foreign parent.

Filing Requirements for Foreign-Owned LLCs

Annual Filing Obligations

Foreign-owned single-member LLCs must:

Obtain an EIN – Employer Identification Number required before filing
File Form 5472 – Information return of related party transactions
File Pro Forma Form 1120 – Required even though LLC is disregarded
Use Special Filing Address – Different from standard corporate addresses
Mark Forms Properly – Write “Foreign-Owned U.S. DE” at top of forms

Filing Deadline

Entity Type	Due Date	Extension Available
Foreign-Owned DE	April 15	October 15 (6 months)
Calendar year corporation	March 15	September 15
Fiscal year corporation	15th day of 3rd month after year-end	6 months

The Pro Forma Form 1120 Requirement

Foreign-owned disregarded entities must file a “pro forma” Form 1120 along with Form 5472. This modified corporate return includes:

Limited information (not a complete tax return)
Entity identification information
Indication that this is a foreign-owned DE
Form 5472 attached

Important: The pro forma Form 1120 does not create corporate tax liability. It serves only as a cover sheet for the Form 5472 filing.

Special Filing Procedures for Foreign-Owned DEs

Paper Filing Required

Unlike corporations that can e-file, foreign-owned disregarded entities must file by paper or fax:

Mailing Address: Internal Revenue Service 1973 Rulon White Blvd M/S 6112 Attn: PIN Unit Ogden, UT 84201

Fax Number: 855-887-7737

Required Form Markings

At the top of both Form 1120 and Form 5472, write:

“Foreign-Owned U.S. DE”

This ensures your forms are processed correctly and routed to the appropriate unit.

Obtaining an EIN

Before filing, your LLC must have an Employer Identification Number. Foreign-owned entities can obtain an EIN by:

Filing Form SS-4 by mail or fax (not online for foreign owners)
Using a third-party designee with a U.S. address
Working with a CPA who can assist with the application

What Must Be Reported on Form 5472

Reportable Transactions

All transactions between the LLC and related parties must be reported, including:

Monetary Transactions:

Capital contributions from foreign owner
Distributions to foreign owner
Loans to or from related parties
Management fees
Interest payments
Rent payments

Non-Monetary Transactions:

Property transfers
Use of intangible property
Services received at no charge
Guarantees and cost-sharing

For detailed guidance on transaction reporting, see our Form 5472 Reportable Transactions Guide.

Initial Formation Transactions

When a foreign-owned LLC is first formed, the following are reportable:

Initial capital contribution (cash or property)
Any assets transferred to the LLC
Organizational expenses paid by the owner
Any loans made to start the business

Zero Activity Still Requires Filing: Even if your LLC had no business activity during the year, the formation itself created reportable transactions that must be reported.

Penalty Exposure for Foreign-Owned LLCs

Standard Penalties

The penalty for failure to file Form 5472 is severe:

Initial penalty: $25,000 per form
Continuing penalty: Additional $25,000 for each 30-day period after 90-day IRS notice
No maximum: Penalties can continue to accumulate

Multiple Year Exposure

Foreign investors who were unaware of the 2017 expansion may have multiple years of non-compliance:

Example: A foreign investor formed an LLC in 2018 and has never filed Form 5472.

2018: $25,000 penalty
2019: $25,000 penalty
2020: $25,000 penalty
2021: $25,000 penalty
2022: $25,000 penalty
2023: $25,000 penalty
Total exposure: $150,000+

For detailed penalty information and relief options, see our Form 5472 Penalties and Relief Guide.

Common Mistakes by Foreign-Owned LLCs

Top Filing Errors

Not knowing about the requirement – The 2017 expansion caught many foreign investors unaware
Believing “disregarded” means no filing – This misconception leads to significant penalty exposure
Not obtaining an EIN – Cannot file without an Employer Identification Number
Using standard filing address – Foreign-owned DEs must use the special Ogden address
Forgetting to mark forms – Must write “Foreign-Owned U.S. DE” on forms
Missing the April 15 deadline – Different from corporate March 15 deadline
Attempting to e-file – Paper filing or fax is required
Not reporting formation transactions – Initial capital contribution is reportable
Incomplete transaction reporting – All related party transactions must be included
Not maintaining records – 7-year record retention required

State Tax Implications for Foreign-Owned LLCs

State Filing Requirements

Federal Form 5472 compliance does not address state obligations. Many states have their own requirements:

California:

$800 minimum franchise tax
Annual LLC fee based on gross receipts
Aggressive nexus enforcement

Delaware:

$300 annual franchise tax
Simple requirements but still mandatory

Wyoming:

No state income tax
Annual report fee required
Popular for foreign investors

New York:

Publication requirements for LLCs
State filing obligations
NYC taxes may apply

Nexus Considerations

Foreign-owned LLCs may create state tax nexus in multiple states based on:

Physical presence
Economic nexus thresholds
Property ownership
Employee presence

Real Estate LLCs: Special Considerations

Why Foreign Investors Use LLCs for Real Estate

Liability protection
Pass-through taxation
Estate planning benefits
Privacy (in some states)

Form 5472 Requirements for Real Estate LLCs

Real estate LLCs owned by foreign persons must report:

Rental income and expenses
Property management fees
Maintenance and repairs
Insurance payments
Property taxes paid
Mortgage interest
Capital contributions for property purchase
Distributions from rental income

FIRPTA Interaction

Form 5472 is separate from FIRPTA (Foreign Investment in Real Property Tax Act) withholding. However, both may apply:

Form 5472: Annual information return
FIRPTA: Withholding on sale of U.S. real property

Coming Into Compliance

If You Haven’t Been Filing

Foreign-owned LLC owners who discover they should have been filing have options:

1. Delinquent International Information Return Submission Procedures

File all delinquent returns
Attach reasonable cause statement
File before IRS contact
May avoid penalties with proper documentation

2. Streamlined Filing Compliance Procedures

For non-willful violations
Broader compliance program
Certification of non-willfulness required

3. Work with a Tax Professional

Assess your specific situation
Determine best approach
Prepare proper documentation
File with reasonable cause statements

Best Practices Going Forward

File Form 5472 every year, even with no activity
Keep detailed records of all related party transactions
Maintain ownership documentation
Calendar filing deadlines
Work with a CPA familiar with international requirements

Frequently Asked Questions

Do I need Form 5472 if my LLC had no income?

Yes. The filing requirement exists regardless of income or activity level. The formation of the LLC itself creates reportable transactions (capital contributions).

Can I e-file Form 5472 for my foreign-owned LLC?

No. Foreign-owned disregarded entities must file by paper mail or fax to the special IRS address in Ogden, Utah.

What if I formed my LLC years ago and never filed?

You should consider filing delinquent returns with reasonable cause statements. Working with a tax professional can help you determine the best approach for your situation.

Do I need to file in the state where my LLC is formed?

You may have filing obligations in your formation state and any other state where you have business activity or property. State requirements are separate from federal Form 5472.

My LLC owns real estate but has no rental income. Do I still file?

Yes. Property ownership through a foreign-owned LLC requires Form 5472 filing. Property-related transactions (taxes, insurance, maintenance) are reportable.

What records should I keep for Form 5472?

Maintain records of all transactions with related parties for at least 7 years. This includes bank statements, receipts, agreements, and any documentation supporting reported amounts.

Can penalties really reach $25,000 for a simple LLC?

Yes. The $25,000 penalty applies per form, per year. Multiple years of non-compliance can result in substantial penalty exposure regardless of LLC size or activity.

Do I need Form 5472 if my LLC elected S-corp status?

If your LLC elected to be taxed as an S-corporation and has 25% or more foreign ownership, you would file Form 5472 with the S-corp return rather than as a disregarded entity.

Professional Services for Foreign-Owned LLCs

SDO CPA provides comprehensive Form 5472 compliance services for foreign-owned LLCs:

Initial compliance assessment
EIN application assistance
Form 5472 preparation
Pro forma Form 1120 filing
Delinquent return preparation
Reasonable cause statement drafting
Ongoing annual compliance

Questions about your foreign-owned LLC filing requirements? Contact SDO CPA for a consultation to assess your situation.

This guide is for informational purposes only and does not constitute tax or legal advice. Foreign-owned LLC requirements are complex and penalties are significant. Consult a qualified tax professional for advice specific to your situation.

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