Form 5472: Information Return of a 25% Foreign-Owned US Corporation or a Foreign Corporation Engaged in a US Trade or Business

Who Files Form 5472

A US corporation that is at least 25% owned by a single foreign person, a foreign corporation engaged in a US trade or business, and, since 2017, a US single-member LLC that is wholly owned by a foreign person and treated as a disregarded entity. The foreign-owned LLC must file Form 5472 with a pro forma Form 1120 even though a single-member LLC normally files no return at all.

What Form 5472 Reports

Form 5472 reports reportable transactions between the US reporting entity and its related foreign parties, including sales and purchases, rents and royalties, interest and loans, commissions, capital contributions, and distributions. For a foreign-owned disregarded LLC, even the owner's initial contribution that funds the entity is a reportable transaction, so the obligation can arise in the first year before any business income. The form exists for transfer-pricing oversight under IRC Sections 6038A and 6038C. A separate Form 5472 is filed for each related party. The penalty is $25,000 per form, per year, with an additional $25,000 for each 30-day period after a notice goes unanswered for 90 days, and there is no statutory maximum.

Key Deadlines

• Filed with the reporting entity Form 1120 by the corporate due date (April 15 for calendar-year filers), including extensions
• A foreign-owned disregarded-entity LLC files Form 5472 attached to a pro forma Form 1120 by the same deadline, typically by paper or fax to the dedicated IRS unit

Common Mistakes

• Foreign-owned single-member LLCs assuming they have no filing obligation because a disregarded entity files no income tax return
• Forgetting that the initial capital contribution to form the LLC is itself a reportable transaction
• Filing only one Form 5472 when transactions occurred with multiple related parties
• Missing the pro forma Form 1120 that must accompany a foreign-owned LLC filing
• Failing to maintain US records sufficient to support the reported transactions (a separate penalty under Section 6038A)

Best Practices

• If a foreign person owns a US LLC or 25%+ of a US corporation, assume Form 5472 applies and confirm before the first deadline.
• Keep a year-round ledger of every contribution, distribution, loan, sale, rent, and fee involving the foreign owner and affiliates.
• Support related-party pricing at arm's length; Form 5472 is a primary IRS transfer-pricing screening tool.
• Fix prior-year non-filings proactively with a reasonable-cause statement before the uncapped $25,000-per-year penalty stacks.
• Do not confuse Form 5472 (inbound, foreign-owned US entity) with Form 5471 (outbound, US-owned foreign corporation); some structures need both.

Source: Official Form 5472 information at IRS.gov