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SM
Foreign-Owned Single-Member LLC: Form 5472 & Form 1120 Filing
Every Form 5472 and pro forma Form 1120 filing is prepared by our licensed CPA team and reviewed and signed by Arik Rozen, CPA, MBA (Virginia Board of Accountancy License #025991). All filings include Zero-Penalty Guarantee and IRS filing confirmation.
The Basics
A Single Member LLC (SMLLC)
is a Limited Liability Company (LLC)
created by state statute
with only one member (owner)
Entity
type
LLC
No. of
Owners:
1
Filing
Deadline:
04/15
Non filing
Penalty:
$25k
F.A.Qs
Everything you need to know about
Single Member LLC
Form 5472
Form 1120
Single member LLC
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- 03In most cases, Foreign Owned Single Member LLC (SMLLC) does not pay U.S. income tax if: 1. All of the owners are non U.S. citizens / residents 2. The LLC does not have U.S. employees or freelancers 3. There is no physical office, warehouse, shipping facility or other type of physical presence in the U.S. If the LLC has U.S. residents / Citizen owners, or it has U.S. employees / freelancers, or it has a physical presence in the U.S., the LLC's income is considered: Effectively Connected Income (ECI). Generally, when a foreign person engages in a trade or business in the United States, all income from sources within the United States connected with the conduct of that trade or business is considered to be Effectively Connected Income (ECI). This applies whether or not there is any connection between the income, and the trade or business being carried on in the United States, during the tax year. Generally, you must be engaged in a trade or business during the tax year to be able to treat income received in that year as ECI. You usually are considered to be engaged in a U.S. trade or business when you perform personal services in the United States. Whether you are engaged in a trade or business in the United States depends on the nature of your activities. Deductions are allowed against ECI, and it is taxed at the graduated rates or lesser rate under a tax treaty. The discussions that follow will help you determine whether you are engaged in a trade or business in the United States.
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- 05Filing deadline: Single member LLC: April 15 (if it is weekend, April 18). Multi Member LLC: March 15 (if it is weekend, March 18). C. Corporation (INC): April 15 (if it is weekend, April 18) Sole Proprietor Person: April 15 (if it is weekend, April 18) Extension: We can extend the filing deadline by 6 months. Please contact us if you need an extension. Please note - the extension only applies for filing the actual tax return, but it does not apply to any tax payment you owe or need to make for the year (estimated or actual)
- 06Yes, the IRS (Internal Revenue Service) which is the U.S.'s tax collection agency and administers the Internal Revenue Code enacted by Congress started to impost aggressive penalties on Foreign owned Single Member LLC if failing to file form 5472: A penalty of $25,000 will be assessed on any reporting corporation that fails to file Form 5472 when due and in the manner prescribed. The penalty also applies for failure to maintain records as required by Regulations section 1.6038A-3. Note. Filing a substantially incomplete Form 5472 constitutes a failure to file Form 5472. Each member of a group of corporations filing a consolidated information return is a separate reporting corporation subject to a separate $25,000 penalty and each member is jointly and severally liable. If the failure continues for more than 90 days after notification by the IRS, an additional penalty of $25,000 will apply. This penalty applies with respect to each related party for which a failure occurs for each 30-day period (or part of a 30-day period) during which the failure continues after the 90-day period ends. Criminal penalties under sections 7203, 7206, and 7207 may also apply for failure to submit information or for filing false or fraudulent information.
- 07To prepare your annual tax return and all related forms, statements, and schedules, we will need the following information: **Personal Information for the Owner:** - Full name - Marital status - Home address - % of ownership - Country of citizenship - Country of residency - Any ITIN or SSN? - Any U.S. visa during the year? - Any other U.S. visa in the past? - Days spent in the U.S. during the year - Did you file taxes in your country of residency? - Any income from U.S. sources during the tax year? - Any previous year tax return? (if yes, send us a copy) **Company Information:** - Company name - Company EIN - State of incorporation - Date of incorporation - Company mailing address - What does the company do? (short description) - Do you have any U.S. employees? - Did you ship any products from the U.S.? - Did you have any physical location in the U.S.? - Where is the company management located? **Manager Information:** - Full name **Company Activity:** - Did the company have any activity? Yes / No If yes, please send us: 1. Income statement (Download Excel sample: [Income Statement](https://templates.office.com/en-us/income-statement-1-year-tm16410109)) 2. Balance sheet (Download Excel template: [Balance Sheet](https://templates.office.com/en-us/balance-sheet-tm03934533))
- 08The process is easy and fast: Step 1: Create your account (2 minutes) Step 2: Answer few questions (10 minutes) Step 3: We prepare the forms and our network of top tax experts (TTE) review your filing to make sure it is 100% accurate and in full compliance with the IRS requirements (about 24 hours) Step 4: You digitally sign the forms (5 minutes) Step 5: Filing and submission to the IRS (5 minutes) On average the entire process takes no more than 24-48 hours.
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- 10The process is easy and fast: Step 1: Create your account (2 minutes) Step 2: Answer few questions (10 minutes) Step 3: We prepare the forms and our network of top tax experts (TTE) review your filing to make sure it is 100% accurate and in full compliance with the IRS requirements (about 24 hours) Step 4: You digitally sign the forms (5 minutes) Step 5: Filing and submission to the IRS (5 minutes) On average the entire process takes no more than 24-48 hours.
Form 1120
- 01Form 1120, Issued by the IRS (Internal Revenue Service) which is the U.S.'s tax collection agency and administers the Internal Revenue Code enacted by Congress. It is used to report: U.S. Corporation income, gains, losses, deductions, credits, and to figure the income tax liability of a corporation. Foreign-owned LLCs that are required to file form 5472, also known as Foreign-owned U.S. DE.
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- 04A corporation that does not file its tax return by the due date, including extensions, may be penalized 5% of the unpaid tax for each month or part of a month the return is late, up to a maximum of 25% of the unpaid tax. The minimum penalty for a return that is more than 60 days late is the smaller of the tax due or $435. The penalty will not be imposed if the corporation can show that the failure to file on time was due to reasonable cause.
General Questions
- 01Our platform, allows non U.S. residents to file their tax returns for single-member LLC, multi-member LLC, C. corporation and Sole Proprietorship in minutes and do it all online from their phones, tablets or computers. Form5472.online AI will ask you several questions to determine which type of filing do you need, and our network of top expert tax advisers (TETA) will make sure that your filing is prepared 100% accurate and in full compliance with the U.S. tax laws.
- 02Yes. Our network of Top Expert Tax Advisers (TETA) stands by to answer any questions raised by our clients. From5472.online will assign an expert to serve as your account manager and you will have the expert's complete contact information which you can use to discuss your specific filing and have all of your questions answered.
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- 04After you checkout, we will send you 2 emails: 1. Order confirmation- we ask you to review all the order data and confirm it And; 2. Request for all the information we need, including: a. Owners information b. Company information c. Financials (if any transactions) We also assign a CPA to be your account Manager, the CPA will manage all of your filing from start to finish and you will be in direct contact. If any other info will be required - the CPA will let you know promptly. Secured Client Portal: --- IMPORTANT! Each customer receives link to our secured client portal, there you can chat directly with the tax team and your account manager, upload your documents, review our documents and the tax filing and of course e-sign the returns after you approve each of them.
- 05Yes, you can make correction and changes to your filing up to the last step, which is Step 4: e-Signing your tax filing. We will send you complete copy of your tax filing for review and signing. If you notice any errors or omissions, you will be able to inform your account manager of the required changes and we will make the necessary amendments and send you revised filing.
- 06100% yes! We provide life time support for your tax filing. This includes: Keeping your tax filing available on your account Providing explanations on your filing* Providing copies of the filing* Providing supporting documents as required by law * We will provide IRS audit support to customers that opt-in to our IRS AUDIT PROTECTION PLAN. * We keep copies of your tax filing for 3 years as required by law.
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Form 5472
- 01Form 5472 is an Information Return that is used to report 25% or more foreign ownership of a foreign-owned LLCs, US Corporations or a Foreign Corporation Engaged in a US Trade or Business. Form 5472 is issued by the IRS (Internal Revenue Service) which is the U.S.'s tax collection agency and administers the Internal Revenue Code enacted by Congress.
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- 03Single Member LLC or Multi Member LLC or a 25% Foreign-Owned U.S. Corporation (FOCC) or a Foreign Corporation Engaged in a U.S. Trade or Business or a Foreign Sole Proprietor Engaged in a US Trade or Business must file form 5472. While a foreign-owned U.S. DE has no income tax return filing requirement, as a result of final regulations under section 6038A, it is required to file a pro forma Form 1120 with Form 5472 attached by the due date (including extensions) of that Form 1120. The only information required to be completed on Form 1120 is the name and address of the foreign-owned U.S. DE and items B and E on the first page. The foreign-owned U.S. DE has the same tax year used by its owner for U.S. tax filing requirements or, if none, the calendar year. Foreign Corporation Engaged in a U.S. Trade or Business must file form 5472 and form 1040NR.
- 04In general, the deadline to the LLC's annual federal tax return including forms 1120 & 5472 and all related schedules and statements is April 15 of each year for the previous tax year. This means that the deadline to file the 2022 tax return is April 15, 2023. If April 15 falls on a weekend, the deadline will be extended to April 18.
- 05A penalty of $25,000 will be assessed on any reporting corporation that fails to file Form 5472 when due and in the manner prescribed. The penalty also applies for failure to maintain records as required by Regulations section 1.6038A-3. Note. Filing a substantially incomplete Form 5472 constitutes a failure to file Form 5472. Each member of a group of corporations filing a consolidated information return is a separate reporting corporation subject to a separate $25,000 penalty and each member is jointly and severally liable. If the failure continues for more than 90 days after notification by the IRS, an additional penalty of $25,000 will apply. This penalty applies with respect to each related party for which a failure occurs for each 30-day period (or part of a 30-day period) during which the failure continues after the 90-day period ends. Criminal penalties under sections 7203, 7206, and 7207 may also apply for failure to submit information or for filing false or fraudulent information.
- 06A reporting corporation is either: A 25% foreign-owned U.S. corporation (including a foreign-owned U.S. disregarded entity (DE)), or A foreign corporation engaged in a trade or business within the United States. 25% foreign owned. A corporation is 25% foreign owned if it has at least one direct or indirect 25% foreign shareholder at any time during the tax year. 25% foreign shareholder. Generally, a foreign person (defined later) is a 25% foreign shareholder if the person owns, directly or indirectly, at least 25% of either: The total voting power of all classes of stock entitled to vote, or The total value of all classes of stock of the corporation. The constructive ownership rules of section 318 apply with the following modifications to determine if a corporation is 25% foreign owned. Substitute “10%” for “50%” in section 318(a)(2)(C). Do not apply sections 318(a)(3)(A), (B), and (C), so as to consider a U.S. person as owning stock that is owned by a foreign person. Direct 25% foreign shareholder. A foreign person is a direct 25% foreign shareholder if it owns directly at least 25% of the stock of the reporting corporation by vote or value. Ultimate indirect 25% foreign shareholder. An ultimate indirect 25% foreign shareholder is a 25% foreign shareholder whose ownership of stock of the reporting corporation is not attributed (under the principles of sections 958(a)(1) and (2)) to any other 25% foreign shareholder. See Rev. Proc. 91-55, 1991-2 C.B. 784.
- 07A related party is: Any direct or indirect 25% foreign shareholder of the reporting corporation, Any person who is related (within the meaning of section 267(b) or 707(b)(1)) to the reporting corporation, Any person who is related (within the meaning of section 267(b) or 707(b)(1)) to a 25% foreign shareholder of the reporting corporation, or Any other person who is related to the reporting corporation within the meaning of section 482 and the related regulations. “Related party” does not include any corporation filing a consolidated federal income tax return with the reporting corporation. The rules in section 318 apply to the definition of related party with the modifications listed under the definition of 25% foreign shareholder, earlier.
- 08A reportable transaction is: Any type of transaction listed in Part IV (for example, sales, rents, etc.) for which monetary consideration (including U.S. and foreign currency) was the sole consideration paid or received during the reporting corporation’s tax year; Any transaction or group of transactions listed in Part IV, if: Any part of the consideration paid or received was not monetary consideration, or Less than full consideration was paid or received; or Any transaction listed in Part V. Transactions with a U.S. related party, however, are not required to be specifically identified in Parts IV, V, and VI.
- 09A foreign person is: An individual who is not a citizen or resident of the United States; An individual who is a citizen or resident of a U.S. possession who is not otherwise a citizen or resident of the United States; Any partnership, association, company, or corporation that is not created or organized in the United States; Any foreign estate or foreign trust described in section 7701(a)(31); or Any foreign government (or agency or instrumentality thereof) to the extent that the foreign government is engaged in the conduct of a commercial activity as defined in section 892. However, the term “foreign person” does not include any foreign person who consents to the filing of a joint income tax return.
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- 11A foreign-owned U.S. DE is a domestic DE that is wholly owned by a foreign person. For tax years beginning on or after January 1, 2017, and ending on or after December 13, 2017, a foreign-owned U.S. DE is treated as an entity separate from its owner and classified as a corporation for the limited purposes of the requirements under section 6038A that apply to 25% foreign-owned domestic corporations. See the final regulations at IRS.gov/irb/2017-03_IRB#TD-9796.
Can I File Form 5472 Myself? A CPA Answers Honestly
Technically, no law requires you to use a CPA to file Form 5472. But the question is not whether you can file it yourself — it is whether you can file it correctly. The pro forma Form 1120 requirement, the reportable transaction classification rules, and the $25,000 automatic penalty for a substantially incomplete filing make this one of the most consequential DIY decisions a foreign LLC owner can make. This guide gives you an honest answer.
Form 5472 and the Foreign-Owned Disregarded Entity: What Every Foreign LLC Owner Must Understand
Most foreign-owned U.S. LLC owners have never heard the term disregarded entity — yet it is the classification that determines exactly how they must file Form 5472. Understanding what it means, why it matters, and how it affects the pro forma Form 1120 requirement is essential before filing. This CPA guide explains the classification and corrects the most common misconceptions.
My LLC Had No Activity This Year — Do I Still Need to File Form 5472?
Many foreign-owned LLC owners believe that a company with no income, no U.S. bank account, and no business activity is exempt from Form 5472. It is not. The registered agent fee alone — paid personally by the foreign owner from any account — is a reportable transaction that triggers the filing obligation. This CPA guide explains exactly why the no-activity exemption does not exist and what to do about it.
Owner Contributions vs. Loans on Form 5472: How to Classify and Report Each Correctly
When a foreign owner transfers money to their U.S.
LLC, the transaction is always reportable on Form
5472 — but how it is classified matters. A capital
contribution and a loan are both reportable under
Treasury Regulation §1.6038A-2, but they are
reported differently and misclassifying one as the
other is one of the most common Form 5472 errors.
This CPA guide explains the difference.
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