Form 5472 (the 5472 form for foreign-owned US companies)

This form is the most expensive surprise in international ecommerce. The typical case: a seller in the UK or Pakistan forms a Wyoming LLC to sell on Amazon US, is told correctly that a single-member LLC is "disregarded" for tax, and concludes no filing is needed. Wrong. The disregarded entity still owes Form 5472 every year it has reportable transactions with its owner, and simply funding the LLC's bank account counts. Miss it and the penalty starts at $25,000 per year, per form.

Who has to file the 5472 form

Two groups. First, any US corporation with at least one 25% foreign shareholder, which the IRS calls a reporting corporation. Second, since 2017, any US LLC with a single foreign owner, which the rules treat as a corporation for this one purpose only. A UK resident who owns 100% of a Delaware LLC is squarely in the second group. A foreign-owned multi-member LLC is not; it files a partnership return on Form 1065 instead, with its own foreign-partner paperwork.

The filing only triggers when there's a reportable transaction with a related party during the year. In practice there almost always is. Money you put into the LLC, money you take out, a loan in either direction, rent or fees paid to your own foreign company, and even the initial capital that opened the bank account are all reportable. An LLC with zero sales and one $500 owner deposit still files.

What goes on the form

Part I identifies the reporting corporation and its EIN, which is why every foreign-owned LLC needs an EIN before anything else. Part II identifies the 25% foreign shareholder, with their country and foreign tax ID. The later parts list the transactions by type and dollar amount: sales, purchases, loans, contributions, distributions. A foreign-owned disregarded LLC attaches the 5472 to a pro forma Form 1120, meaning an 1120 with only the name, address and EIN filled in and "Foreign-owned U.S. DE" written across the top. That package can't be e-filed through normal software; it goes to the IRS by fax or mail at the address in the instructions.

Deadline and the penalty math

The 5472 form is due when the 1120 is due: April 15 for a calendar-year company, with an automatic six-month extension to October 15 if you file Form 7004 by the April date. Miss both and the penalty is $25,000, plus another $25,000 for every 30 days the form stays unfiled after the IRS sends notice. Two forgotten years is $50,000 before interest. The penalty applies per form, so a company with two foreign owners each at 25% owes two forms and faces two penalties.

Reasonable-cause relief exists. First-time filers who come forward with the missing years before the IRS writes often get penalties reduced or removed. Waiting for the letter makes that argument much harder.

Where the numbers come from

Every dollar amount on the form is a line your bookkeeping should already hold: owner contributions in equity, owner draws in distributions, intercompany loans on the balance sheet. Sellers with clean books produce the 5472 in an afternoon. Sellers who ran the business through a personal account spend weeks working out which payments were related-party transactions and which were supplier invoices. Related terms worth knowing: EIN (required on the form), ITIN (usually not required), and W-8BEN for the marketplace tax interview.

Common questions

My LLC made no money. Do I still file? Yes, if the owner put any money in or took any out. Zero revenue doesn't mean zero reportable transactions.

Does the 5472 form mean I owe US income tax? No. It's an information return. Whether the LLC's profit is taxable in the US is a separate question about effectively connected income and treaties, and plenty of foreign Amazon sellers file the 5472 every year and owe nothing.

Can I file it myself? You can. The form runs a few pages and the pro forma 1120 cover is mostly blank. Most owners hand it to a preparer anyway, since a $25,000 penalty makes a few hundred dollars of professional fees look cheap.

We cover the whole requirement in our Form 5472 guide, and compliance for foreign-owned sellers, this form included, is the core of our international sellers practice.