Form 5472

Form 5472 (Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business) is an IRS reporting form required for any U.S. corporation or LLC treated as a corporation that has at least one 25%-or-greater foreign owner and engages in reportable transactions with related foreign parties during the tax year. This form is one of the most consequential compliance obligations for foreign-owned U.S. businesses because the penalty for failure to file, filing late, or filing an incomplete/inaccurate form is $25,000 per form per year — one of the highest per-form penalties in the Internal Revenue Code. If the IRS sends a notice of non-compliance and the entity fails to substantially comply within 90 days, an additional $25,000 penalty accrues for each subsequent 90-day period. Reportable transactions include: capital contributions from foreign owners, loans between the entity and foreign related parties, rental payments, service fees, interest payments, royalties, tangible and intangible property transfers, and any transaction exceeding $0 between the entity and a related foreign person. Critically, even a single-member foreign-owned LLC that is normally a disregarded entity for tax purposes must file a pro forma Form 1120 (U.S. Corporation Income Tax Return) solely to attach Form 5472 — a requirement established by Treasury Regulations Section 1.6038A-1(c)(1) following the 2017 Tax Cuts and Jobs Act changes. Form 5472 is due with the entity's income tax return (March 15 for S-Corps, April 15 for C-Corps, and the applicable date for LLCs depending on tax election), with a 6-month extension available. doola automatically prepares and files Form 5472 for all foreign-owned clients, tracking every reportable transaction throughout the year to ensure complete and timely submission.