Form 5472 Guide: Filing Requirements, Deadlines & Penalties
Introduction
If you’re a foreign individual or company owning a U.S. business, there’s one IRS form you cannot afford to ignore Form 5472.
This form reports transactions between your U.S. company and its foreign owners or related parties. The IRS uses it to track money moving in and out of foreign-owned American businesses.
Miss this filing? You could face a $25,000 penalty even if you owe zero taxes. This guide breaks down everything you need to know: who must file, what to report, deadlines, penalties, and how to stay compliant.
Who Must File Form 5472 ?
Not every U.S. business needs to file Form 5472. But if foreign ownership is involved, you likely do.
Two types of businesses must file:
U.S. corporations with 25% or more foreign ownership
If a single foreign person an individual or company owns at least 25% of your U.S. corporation (by vote or value), you must file. This includes both direct ownership and indirect ownership through a chain of entities.
Foreign corporations doing business in the U.S.
If your company is incorporated outside the U.S. but operates a trade or business within the country, Form 5472 applies to you as well.
The single-member LLC rule
Since 2017, foreign-owned single-member LLCs face a special requirement. Even though these LLCs are “disregarded” for tax purposes, they must still file Form 5472 along with a pro forma Form 1120. This catches many foreign owners off guard.
If you fall into any of these categories and have reportable transactions, filing is mandatory.
Not Sure If You Need to File?
Talk to a qualified CPA who specializes in foreign-owned U.S. businesses.
What Are Reportable Transactions in Form 5472 ?
Form 5472 doesn’t just ask if you have foreign ownership. It wants to know what money or value moved between your U.S. business and its foreign related parties.
Common reportable transactions include:
- Payments for goods or services
- Rents, royalties, and interest payments
- Loans given or received
- Capital contributions from foreign owners
- Distributions to foreign owners
- Payments related to forming, dissolving, or reorganizing the entity
The key word here is “related party.” This includes your foreign shareholders, their family members, and any entities under common ownership.
How Form 5472 is Connected with Form 1120 ?
Form 5472 is not filed on its own. It gets attached to your U.S. corporation’s income tax return Form 1120.
For C-corporations:
Simply attach Form 5472 to your regular Form 1120 when you file your annual tax return. If you have transactions with multiple related parties, you may need to file a separate Form 5472 for each one.
For foreign-owned single-member LLCs:
Here’s where it gets tricky. These LLCs don’t normally file Form 1120 because they’re disregarded for tax purposes. But for Form 5472, they must file a “pro-forma” Form 1120 – a simplified version with only basic information and attach Form 5472 to it.
Filing Deadline and Extensions for Form 5472.
Form 5472 follows the same deadline as your Form 1120.
For calendar-year filers:
The deadline is April 15. If your business follows a fiscal year, the due date is the 15th day of the fourth month after your tax year ends.
Extensions:
If you file for an extension on Form 1120, your Form 5472 deadline extends automatically. For most businesses, this pushes the deadline to October 15.
No separate extension is needed for Form 5472 it simply rides along with your corporate return extension.
Mark these dates. Late filing triggers automatic penalties.
Penalties for Non-Compliance with filing form 5472.
The IRS does not take Form 5472 lightly. Penalties are steep even if you owe no taxes.
Base penalty:
Failing to file Form 5472 or filing an incomplete or inaccurate form triggers a $25,000 penalty per form, per year.
Continuation penalty:
If the IRS notifies you about the missing form and you still don’t file, additional penalties of $25,000 can be added for each 30-day period of non-compliance. These stack up fast.
Reasonable cause relief:
The IRS may waive penalties if you can prove “reasonable cause” meaning you had a valid reason for the failure and acted in good faith. But this is not guaranteed, and the burden of proof is on you.
file on time, file completely.
When You Need Professional Help regarding Form 5472 ?
Form 5472 can seem straightforward, but certain situations call for expert guidance.
Consider professional help if:
- Your ownership structure involves multiple layers of foreign entities
- You have transactions with several related parties across different countries
- You missed previous filings and need to address penalties
- You’re unsure whether your LLC qualifies as a disregarded entity
- The IRS has contacted you about Form 5472 issues
CountSure’s qualified tax professional can ensure accurate filing, identify unreported transactions, and help you request penalty abatement if needed.
Getting it right the first time is always cheaper than fixing mistakes later.
About The Author
CPA Parth Shah is the founder of Countsure, a tax compliance firm serving clients in the USA and India. With over 5 years of experience, Parth specializes in international tax, foreign-owned U.S. entities, and cross-border compliance.
He holds multiple credentials CPA (USA), CA (India), DISA, and IBBI Registered Valuer and is a member of AICPA, ICAI, and RVO.
Parth has helped 250+ foreign entrepreneurs navigate complex U.S. tax requirements. His goal is simple: make compliance easy and penalty-free.
Have questions? Reach out to Parth and the Countsure team today.
FAQs
Form 5472 is an IRS information return that reports transactions between a foreign-owned U.S. corporation (or a foreign-owned single-member LLC) and its foreign related parties. The IRS uses it to track money and value moving in and out of foreign-owned American businesses
- Three types of businesses must file: (1) U.S. corporations with at least 25% foreign ownership, (2) foreign corporations engaged in a U.S. trade or business, and (3) foreign-owned single-member LLCs even though they are disregarded for tax purposes.
- The penalty for failing to file — or filing an incomplete or inaccurate form is $25,000 per form, per year. If you still don’t file after IRS notice, an additional $25,000 penalty applies for each 30-day period of continued non-compliance.
- Form 5472 is due with your Form 1120. For calendar-year filers, the deadline is April 15. If you file an extension for Form 1120, Form 5472 automatically extends to October 15 no separate extension is needed.
- Since 2017, foreign-owned single-member LLCs must file Form 5472 along with a pro forma Form 1120 even though the LLC is “disregarded” for federal tax purposes. This rule catches many foreign owners off guard.
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