April’s tax deadlines catch many founders by surprise, especially international entrepreneurs operating a U.S. LLC. 

If your business is 25% or more foreign-owned, you may be required to file Form 5472, even if you don’t owe taxes. Missing this filing can cost you $25,000 or more.

This guide breaks it down so you can stay compliant and avoid penalties.

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Who must file Form 5472?

If you own a U.S. LLC that is 25% or more foreign-owned, you are likely required to file Form 5472 with the IRS. This applies to:

• Single-member LLCs owned by non-U.S. individuals
• Multi-member LLCs with foreign owners
• U.S. corporations with significant foreign ownership

The filing discloses certain reportable transactions between the LLC and its foreign owners or related parties. The IRS uses this form to prevent tax avoidance and ensure transparency in cross-border activities.

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What is Form 5472 used for?

Form 5472 collects information about reportable transactions between the foreign owner and the U.S. LLC. These transactions can include:

• Capital contributions
• Loans or advances
• Rents and royalties
• Sales and purchases of inventory
• Any exchange of funds or assets

Even if your LLC had no income and no tax liability, you may still be required to file Form 5472 along with a pro forma Form 1120.

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How do you file Form 5472 and pro forma Form 1120?

To file Form 5472 properly, you must:

1. Complete Form 1120 (pro forma) – Fill out basic information on the first page. You’ll usually enter "Foreign-Owned U.S. Disregarded Entity" across the top.
2. Attach Form 5472 – Complete the relevant sections of Form 5472, including:
   
   • Foreign owner details
   • Nature and amounts of reportable transactions
3. File by mail – As of now, foreign-owned disregarded entities must file by mail. Electronic filing is not always accepted for this purpose.

Not sure if you should file this? Book a free consultation with Lazo

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When is the deadline to file Form 5472?

Form 5472 must be filed by April 15 of each year, covering the prior calendar year’s activity. If you miss the April deadline, there is an automatic extension until October 15, but you must file Form 7004 to obtain the extension.

Note: Filing Form 5472 late—without an approved extension—can trigger considerable penalties.

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Penalties for not filing Form 5472

Failing to file Form 5472 (or filing incomplete or inaccurate information) can result in a $25,000 penalty per year. If the IRS contacts you and you fail to respond within 90 days, additional penalties of $25,000 can be assessed for each subsequent 90-day period.

This is one of the most commonly overlooked filing requirements for foreign founders. Even if your LLC had no income, you are not exempt from filing obligations.

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Common mistakes to avoid with Form 5472

Many foreign founders overlook or misunderstand the requirements of Form 5472. Common mistakes include:

• Thinking an inactive LLC doesn’t need to file – You still need to file if the LLC exists.
• Failing to file the pro forma Form 1120 – Form 5472 alone is not enough; it must be attached to Form 1120.
• Missing reportable transactions – Any transfer of money or assets should be disclosed.
• Late filing without requesting an extension – You need to actively request more time by filing Form 7004.

Avoiding these pitfalls can save you from unnecessary penalties.

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FAQ: Quick answers about Form 5472

Do all foreign-owned LLCs need to file Form 5472?‍

If the LLC is 25% or more foreign-owned, yes. Even if there was no income.

What if my LLC had no activity?‍

You still need to file the pro forma 1120 and Form 5472 to avoid penalties.

Can I e-file Form 5472?‍

Not typically. Most foreign-owned disregarded entities must file by paper.

What counts as a reportable transaction?‍

Any transaction involving the transfer of money, goods, or assets between the LLC and its foreign owners or related parties.

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Filing Form 5472 is a crucial compliance step for foreign-owned LLCs. Missing it—or getting it wrong—can lead to serious penalties.

Need help filing Form 5472? Schedule a free consultation with Lazo today. We’ll make sure your forms are accurate, compliant, and submitted on time.

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