How to file 5472 Form as Foreign US Company Owner

How to file 5472 Form as Foreign US Company Owner

In the past 2 years, most US business owners receive a civil penalty because they miss filing the 5472 Form. This fee is $10,000 and it’s a big deal to US business owners as non-US residents. If you received a civil penalty before, the IRS will waive your penalty for one time.

Basic understanding of 5472 Form and who must file?

– Reporting Corporation

A 25% foreign-owned U.S. corporation (including a foreign-owned U.S. DE), or A foreign corporation engaged in a trade or business within the United States.

– 25% foreign-owned

A corporation is 25% foreign owned if it has at least one direct or indirect 25% foreign shareholder at any time during the tax year.

– 25% foreign shareholder

Generally, a foreign person (defined later) is a 25% foreign shareholder if the person owns, directly or indirectly, at least 25% of either:

– Direct 25% foreign shareholder

A foreign person is a direct 25% foreign shareholder if it owns directly at least 25% of the stock of the reporting corporation by vote or value.

– Ultimate indirect 25% foreign shareholder

An ultimate indirect 25% foreign shareholder is a 25% foreign shareholder whose ownership of stock of the reporting corporation is not attributed (under the principles of section 958(a)(1) and (2)) to any other 25% foreign shareholder.

How about Disregarded entities? (DE)

Most of Delaware, Wyoming, and Florida business owners are classified as a Disregarded Entity. Basically, A DE is an entity that is disregarded as an entity separate from its owner for U.S. income tax purposes under Regulations sections 301.7701-2 and 301.7701-3. See the instructions for Form 8832.

When and Where To File

You can attach Form 5472 to the reporting corporation’s income tax return by the due date (including extensions) of the return. A separate Form 5472 must be filed for each foreign or domestic related party with which the reporting corporation had a reportable transaction during the tax year. If you need help with your tax return, you can do with us. Delaware Agency will help you hassle-free tax return regarding needs of Non-US Residents, Disregarded Entities and Foreign-owned Corporations.

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  • David
    / Reply

    In January 2019 I set up a LLC (Sole-Member). I plan to keep the company dormant. The LLC is foreign owned. Does the company formation alone constitutes a Reportable Transaction so I need to file the 5472 form ?

    • admin
      / Reply

      Hello David,

      Yes, if you are a non-resident, you need to file 5472 in the following tax season. If you need help about taxation and filling your forms.

      Also if you want to get updated all of the taxes ( State & Federal ), you can register our registered agent service as well.

  • Alam Ms
    / Reply

    Hello, I am a single member non US resident and non US citizen without US bank account, having a LLC in Delaware and I do private management consultancy activities overseas. I was not aware about form 5472 and 1120 which I just learned from online. I have checked my LLC status which is still in good standing. My question is do I need to file these forms? if so, from which year? also if yes, i will be subject to penalty for late submission? Kindly advise.

    • admin
      / Reply

      Hello Alam,

      If you still have trouble with 5472 form, Contact us.

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