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How to file 5472 Form as Foreign US Company Owner

 

 

 

 

 

 

 

 

 

 

 

 

 

In the last two years, many U.S. business owners have faced civil penalties for failing to file Form 5472. This penalty amounts to $10,000, which is significant for non-U.S. resident business owners. If you’ve previously received a penalty, the IRS may waive it once.

Understanding Form 5472 and Filing Requirements

What Is a Reporting Corporation?

•A U.S. corporation with 25% foreign ownership (including foreign-owned U.S. Disregarded Entities).

•A foreign corporation engaged in business within the U.S.

What Does 25% Foreign-Owned Mean?

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

Who Is a 25% Foreign Shareholder?

A foreign individual or entity that owns, directly or indirectly, at least 25% of the corporation’s stock by vote or value.

Direct 25% Foreign Shareholder

A foreign individual who directly owns at least 25% of the corporation’s stock.

Ultimate Indirect 25% Foreign Shareholder

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

Disregarded Entities (DE)

Many businesses in Delaware, Wyoming, and Florida are classified as Disregarded Entities. A DE is an entity that is not considered separate from its owner for U.S. income tax purposes, per Regulations sections 301.7701-2 and 301.7701-3. See Form 8832 instructions for more details.

Filing Details: When and Where

Attach Form 5472 to the reporting corporation’s income tax return by its due date (including extensions). You must file a separate Form 5472 for each foreign or domestic related party involved in a reportable transaction during the tax year. If you need assistance with your tax return, Delaware Agency provides hassle-free services for non-U.S. residents, Disregarded Entities, and Foreign-owned Corporations.

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