If you’re a foreign person or company involved in a U.S. business, there’s a good chance you’ll need to file Form 5472 with the IRS. This form helps the IRS track transactions between U.S. entities and their foreign owners or affiliates. Failing to file can trigger steep penalties, so understanding the basics is essential.
Form 5472 is required when a U.S. corporation is owned 25% or more by a foreign person or entity. It’s also required for foreign-owned single-member LLCs that have had any reportable transactions. The goal is to ensure transparency and accurate reporting of cross-border financial activities.
What Is Form 5472?
Form 5472 is an information return that reports transactions between a U.S. company and its foreign owner or related foreign parties. The IRS uses this to monitor possible tax avoidance and ensure that related-party dealings are properly documented.
What Information Does Form 5472 Include?
- Company details (name, address, EIN)
- Identity of the foreign owner(s)
- Description of reportable transactions
- Dollar amounts of each type of transaction (e.g., loans, payments for services)
Who Needs to File Form 5472?
You must file Form 5472 if:
- You are a foreign individual or entity that owns at least 25% of a U.S. corporation.
- You own a foreign-owned single-member LLC that had any reportable transactions during the year.
- Your U.S. entity had transactions with any foreign-related parties (not just owners).
Form 5472 is not limited to corporations—it also applies to disregarded entities (like foreign-owned single-member LLCs). The "related party" can be either a foreign person or a foreign business entity.
Most Common Related Parties
- The foreign owner of the U.S. entity
- Another foreign company under common ownership
- A foreign parent or subsidiary
- A foreign lender controlled by the same owner
Common Reportable Transactions
- Capital contributions
- Loans or repayments
- Sales or purchases of goods and services
- Lease or license payments
- Cost-sharing agreements
Common Misconceptions About Reportable Transactions
Some business owners mistakenly believe the following do not need to be reported—but they do:
- Transferring money to the LLC as an owner
- Loaning funds to the U.S. business from a foreign account
- Reimbursing the U.S. business for expenses
Even if these actions aren’t traditional revenue or expenses, they are considered reportable under IRS rules.
Common Forms That Include Form 5472
- Form 1120: Used by U.S. corporations. Form 5472 is attached if the corporation has foreign ownership.
- Pro Forma Form 1120: Required when a foreign-owned single-member LLC is disregarded for tax purposes but still has reportable transactions.
Due Date
Form 5472 is due with the accompanying Form 1120 or pro forma 1120. For calendar-year entities, this means the due date is April 15. Extensions are available if requested by that date.
Common Mistakes
- Thinking it only applies to corporations
- Not attaching it to Form 1120 or pro forma 1120
- Missing the filing entirely because there was no income
- Failing to report capital contributions or owner loans
Why It Matters
The penalty for missing or incorrectly filing Form 5472 is a hefty $25,000 per form, per year. This fine applies even if your business had no income. The IRS takes these filings seriously, especially for foreign-owned entities, and has stepped up enforcement in recent years. A single missed form can result in a penalty large enough to significantly impact a startup or small business.
Get Help From the Experts
Form 5472 can be tricky, and missing it can be expensive. At Bookmate, we help global founders stay compliant with their U.S. tax filings.
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Every tax situation is different. Speak with a Bookmate expert to make sure your business is compliant.
