Form 5472 Explained: Foreign-Owned U.S. Companies and LLCs
Who files, the pro forma 1120 for foreign-owned single-member LLCs, and the US$25,000 penalty
Reviewed by the Fairlight Accounting cross-border tax team — U.S. & Canadian Tax Desks
Form 5472 is the information return a U.S. corporation at least 25 percent foreign-owned — or a U.S. single-member LLC wholly owned by a foreign person — files to report transactions with related parties. A foreign-owned disregarded LLC files it with a pro forma Form 1120 yearly, income or not. The penalty for failing to file is US$25,000 per form.
On this page
Who files
| Entity | Trigger | Return it attaches to |
|---|---|---|
| U.S. corporation | At least one foreign person owns 25 percent or more (vote or value) | Form 1120 |
| Foreign corporation with a U.S. trade or business | Engaged in a U.S. trade or business | Form 1120-F |
| U.S. single-member LLC owned by a foreign person | Any reportable transaction with its owner or related party (contributions, distributions, payments) | Pro forma Form 1120 (only identifying information plus the 5472) |
A Canadian resident who owns a Florida LLC holding a condo or running a business is in the third row — the LLC needs an EIN and files every year (the Canadian resident owning a U.S. LLC guide).
What's reportable
Sales and purchases of property, rents and royalties, services, commissions, interest, loans and their balances, and — for a disregarded LLC — any transaction with the foreign owner, including amounts paid or received in forming, funding, dissolving, acquiring, or disposing of the LLC, such as contributions from and distributions to the owner (the 2016 regulations, T.D. 9796, made these reportable). Each related party gets its own Form 5472.
Penalties
US$25,000 per form per year for failure to file or to maintain records, and an additional US$25,000 for each 30-day period (or part of one) the failure continues more than 90 days after an IRS notice, with no maximum. The penalty applies even if the LLC owed no tax.
Catching up
Foreign owners who learn of the requirement late file the delinquent pro forma returns with Forms 5472 and a reasonable-cause statement; the IRS generally assesses the penalty automatically when a late Form 5472 is processed, and its first-time abatement policy doesn't cover this penalty, so reasonable cause is the main route to relief.
Frequently asked questions
Does my foreign-owned single-member LLC need to file anything?
Yes — a pro forma Form 1120 with Form 5472 every year it has a reportable transaction with its owner, which almost always includes contributions or distributions.
What is the Form 5472 penalty?
US$25,000 per form per year, plus continuation penalties after notice.
Does Form 5472 mean the LLC owes tax?
No. It's an information return; the owner's tax on the LLC's income (if any) is reported on the owner's own U.S. return.
Is the 25 percent foreign ownership test by vote or value?
Either — 25 percent of the total voting power or the total value of all classes of stock.
Official sources
The IRS instructions for Form 5472 state: “A penalty of $25,000 will be assessed on any reporting corporation that fails to file Form 5472 when due and in the manner prescribed.” — Internal Revenue Service, Instructions for Form 5472 (12/2024), https://www.irs.gov/instructions/i5472
Next step
Fairlight Accounting is a cross-border accounting and tax practice with a U.S. Tax Desk and a Canadian Tax Desk. Our U.S. Tax Desk and Canadian Tax Desk handle Form 5472 and pro forma Form 1120 compliance for foreign-owned LLCs and corporations, related-party transaction reporting, delinquent filings, and penalty relief requests. See pricing or book a call.
Cross-border taxes, handled in one place
U.S. and Canadian filings prepared together by our U.S. and Canadian Tax Desks.
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