If you’re a non-U.S. resident who owns a U.S.-registered LLC or C-Corporation, one of the most important IRS requirements to understand is Form 5472. Many foreign founders overlook this form—often because their business earned no revenue or they didn’t know it applied to them.
Unfortunately, ignoring Form 5472 can lead to serious consequences, including a $25,000 penalty per year.
In this article, we’ll break down what Form 5472 is, who needs to file it, how it’s submitted, what the deadlines are, and how to avoid costly mistakes. We’ll keep the language simple and walk through each point clearly.
What Is Form 5472?
Form 5472 is an IRS form used to report information about a foreign-owned U.S. business. The purpose is to disclose who owns the business and what transactions—if any—have taken place between the U.S. company and its foreign owner.
The IRS uses this form to monitor foreign influence and ensure transparency, even when the company hasn’t earned any income. It acts as a key compliance tool that helps the IRS enforce tax laws related to international business structures.
Who Needs to File Form 5472?
You must file Form 5472 if:
- You are a non-U.S. person who owns 25% or more of a U.S. LLC or C-Corp
- Your company is considered a reporting corporation for IRS purposes
- You’ve had any “reportable transactions” with your foreign owner (such as moving money in or out, paying for services, or loaning funds)
Even if your business didn’t do anything during the year, owning the LLC or C-Corp alone is enough to trigger the filing requirement. There does not need to be income or revenue involved. This surprises many new founders, especially those who have just set up their company and haven’t even opened a bank account yet.
What Qualifies as a “Reportable Transaction”?
The definition of a reportable transaction is broad. It includes:
- Initial capital contributions
- Owner loans
- Reimbursements for expenses
- Distributions to the owner
- Management fees or service payments
- Any transfer of money or property between the foreign owner and the U.S. business
Even transferring $1 to or from your company counts as a reportable transaction and must be disclosed. This makes it extremely important to track all owner-business interactions, no matter how small.
What Forms Must Be Submitted?
Form 5472 must be submitted alongside a pro forma Form 1120. This is essentially a blank corporate tax return used only as a cover sheet for Form 5472.
So even if you’re running a single-member LLC and didn’t operate during the year, you still need to:
- Fill out and attach Form 5472
- Prepare and attach a pro forma Form 1120
- Submit both to the IRS by the deadline
If your entity is a C-Corp instead of an LLC, you’ll also need to file a full corporate tax return (Form 1120), and include Form 5472 as an attachment if there are foreign shareholders who meet the 25% threshold.
How and When Do You Submit It?
You cannot file Form 5472 online. It must be submitted to the IRS either by fax or by mail. The fax option is often preferred for speed, but you need to follow strict formatting
rules.
The deadline is April 15 each year, covering the previous calendar year. For example, filings for 2024 are due by April 15, 2025.
If you're not ready to file by the deadline, you can request a six-month extension by submitting Form 7004. This must be filed by April 15 (or March 15 for C-Corps), and it gives you until October 15 to complete your return.
Just remember: the extension only gives you more time to file—not to pay. If your business owes taxes, those are still due by the original deadline.
What Happens If You Don’t File?
Failing to file Form 5472 or submitting an incomplete or inaccurate form can trigger an automatic $25,000 penalty per form. If the IRS sends you a notice and you still don’t correct it, the penalty increases.
There is no “free pass” for newly formed companies or inactive businesses—if you are a foreign owner, you must file. These penalties stack quickly and can be devastating for small founders who didn’t even realize they were noncompliant.
Additionally, the IRS may audit your business or revoke its good standing, which can cause problems with banks, platforms like Stripe or PayPal, and future filings.
Common Mistakes to Avoid
- Thinking you don’t need to file because your business had no income
- Submitting Form 5472 without the pro forma 1120
- Using the wrong codes or leaving out transaction details
- Forgetting to sign or date the forms
- Missing the April 15 deadline without filing Form 7004
- Mailing the form to the wrong IRS office or submitting it electronically (which is not allowed for this form)
Avoiding these mistakes can save you time, money, and stress. Even experienced accountants sometimes miss these details, so it’s crucial to work with a specialist.
What About Multi-Member LLCs?
If your LLC has more than one owner, it’s considered a partnership by the IRS. In that case, you do not file Form 5472—instead, you file Form 1065 and issue Schedule K-1s to each member.
Multi-member LLCs must file annually as partnerships unless they elect to be taxed differently. Form 5472 only applies to single-member LLCs and C-Corps with foreign ownership of 25% or more.
If you’re unsure of your structure or ownership threshold, it’s better to confirm early. Filing the wrong form or missing your requirement altogether could result in unnecessary penalties.
How Bookmate Can Help You Stay Compliant
Bookmate works with founders all over the world—especially from India—who own U.S. businesses. We specialize in helping you meet federal tax obligations like Form 5472, even if your company had no activity during the year.
Our service is designed to be fully remote, easy to understand, and built for busy international founders. Here’s what working with us looks like:
- We begin with a free Zoom consultation to assess your needs
- You receive a digital invoice and engagement letter
- You complete a secure online form with your business info
- We prepare Form 5472 and pro forma 1120 and review them with you
- We file the forms correctly and help you respond to any IRS notices
We also stay up-to-date on IRS guidance specifically related to foreign founders, so you don’t have to worry about misinterpretation or missing deadlines. We understand the typical questions Indian founders face—like whether to pay themselves, how to report Stripe income, or how U.S. rules affect Indian taxes—and we explain it in plain English.
Final Thoughts
If you own a U.S. company and live outside the U.S., understanding Form 5472 is critical. It’s not optional, and the penalties for noncompliance are steep. Even if you made no money or didn’t operate, you still need to file.
Getting help from professionals like Bookmate ensures that you stay on the right side of the IRS—and avoid unnecessary headaches. Don’t wait for a penalty notice to take action.
Book a free consultation to get started or visit trybookmate.co to learn more.
Disclaimer: This article is for informational purposes only and does not constitute legal or tax advice. Each tax situation is unique. Please consult Bookmate or a qualified advisor.
