IRS Tax Form 5472 was created to document the Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business (under sections 6938A & 6038C of the Internal Revenue Code).
Who Needs to File Tax Form 5472?
If you have a one owner LLC that is foreign-owned, then you must file Tax Form 5472 each tax year unless you had no reportable transactions during the reporting year. The de minimus exceptions from filing applicable to corporations do not apply to foreign-owned LLCs.
Basically, this form is for non U.S. citizens or residents who have formed a U.S. based LLC. In order to complete Tax Form 5472 you will need the EIN assigned to your LLC. If you do not have an EIN, one must be applied for and granted in order to fill out form 5472. EIN applications can completed online, over the telephone, by fax or through email.
Associated Tax Penalties
Please note: If Tax Form 5472 is not filled out correctly, you can be hit with with a minimum IRS penalty of $25,000. If the form is filled late (60 days) you pay the smaller of the tax due or $435.
Don’t Forget Tax Form 1120
In addition to filling out Tax Form 5472, you will also want to complete Tax Form 1120. Tax Form 1220 is very simple and straight forward to fill out. Tax Form 1220 is used to record the EIN, name and address of the foreign LLC, along with the date the LLC was formed.
Both Tax Form 5472 and Tax Form 1120, will need to be filed through the mail together as foreign-owned LLCs cannot file online.
What’s Covered in Form 5472?
Tax Form 5472 has 8 major sections. They are as follows:
1. Reporting Corporation
2. 25% Shareholder
3. Related Party
4. Monetary Transaction Between Reporting Corporations and Foreign Related Party
5. Reportable Transactions of Reporting Corporation that is a Foreign-Owned U.S. DE
6. Non-Monetary and Less-Than-Full Consideration Transactions Between the Reporting Corporation and the Foreign Related Party
7. Additional Information
8. Base Erosion Payments and Base Erosion Tax Benefits Under Section 59A
Download Tax Form 5472 and Its Instructions from the IRS
If you have any questions on these tax forms, do not hesitate to contact us. We are here to help.