Form 5472
IRS, 25% Foreign-Owned U.S. Corporation
Reporting for US corporations with a significant foreign owner, and for single-member US LLCs owned by someone outside the US.
What is Form 5472?
Form 5472 records the dealings between a US company and its foreign owners. It catches US corporations with a foreign shareholder holding at least a quarter of the vote or value, and it also catches a US single-member LLC owned by a foreign person. That second group, which includes many UK residents with a Delaware or Wyoming LLC, is where most missed filings sit.
When a UK owner has a US company
The form identifies the foreign shareholder and lists reportable transactions with related parties: capital put in, loans in either direction, fees, sales of goods or services and amounts taken out.
A US corporation with a qualifying foreign owner attaches it to Form 1120. Each related party with reportable transactions needs its own form, so a company with two foreign shareholders who both lend to it will file two.
A US LLC with a single foreign owner is normally disregarded for income tax, so it files no income tax return of its own. For Form 5472 purposes, though, it is treated as a corporation. It files a pro forma Form 1120, completed only with its identifying details, with Form 5472 attached. The instructions route this package by fax or post. The LLC needs its own employer identification number, and the owner's contributions and withdrawals count as reportable transactions.
The penalty is $25,000 per form per year, with more if the failure continues after an IRS notice. There is no exception for a company that made no profit, and the penalty applies to disregarded LLCs as well. The reporting corporation must also keep records sufficient to support the transactions reported. On the UK side the owner still reports the LLC's income to HMRC, and an LLC can be treated differently by HMRC and the IRS.
At a glance
- Form 1120, or a pro forma 1120 for LLCs
- Attached to
- With the corporation's return, including extensions
- Due
- $25,000 per form per year
- Penalty exposure
- Must be kept to support every reported transaction
- Records
Figures are for the tax year stated in the official instructions linked below.
How we handle it
- Business Tax Returns
US federal returns for companies, partnerships and LLCs with UK owners, UK parents or UK operations, prepared alongside the UK accounts.
- Business Incorporation
Choosing between a UK limited company, a US LLC and a US C corporation, with the tax view each country takes of the entity you pick.
- International Tax
US reporting for owners of UK companies and partnerships, and for UK groups with US entities, including Forms 5471, 8858, 8865 and 5472.
- Bookkeeping & Accounting
Bookkeeping kept to a standard that feeds a UK corporation tax return and US Forms 5471 or 5472 without rebuilding the figures later.
Where people go wrong
The Form 5472 errors we correct most often.
Who files it
- US corporations with a foreign shareholder holding at least a quarter
- US single-member LLCs owned by a UK resident or UK company
- US subsidiaries of UK groups dealing with their parent
- Foreign corporations with a US trade or business, in some cases
01
Believing a disregarded LLC with no income has nothing to file
02
Leaving the owner's capital contributions off the transaction schedule
03
Filing one form when there are several related parties
04
Sending the pro forma return through channels the instructions do not allow
Why US UK Tax Returns
Every form is prepared against the official instructions, and every position on it is one we can point to in the Code, the treaty or HMRC's guidance.
One File
US and UK returns prepared in the same engagement and reconciled line by line.
Primary Sources
Every position traced to the Code, the treaty, IRS instructions or HMRC guidance.
Scope First
Returns, forms, years and fee agreed in writing before work begins.
The Same People
The team that files this year carries the elections and credits into the next.
Questions we are asked
I live in London and set up a US LLC for my online business. It made no money. Do I file anything?
Almost certainly. A single-member LLC owned by a foreign person must file a pro forma Form 1120 with Form 5472 if it had reportable transactions, and funding the LLC or taking money out counts. Revenue and profit are not the test. Whether the LLC also has US income tax to pay depends on whether it has a US trade or business, which is a separate question.
Does HMRC see my US LLC the same way the IRS does?
Not necessarily. The IRS disregards a single-member LLC for income tax, but HMRC may treat it as an opaque company, which changes when and how its profits are taxed in the UK and how credit for any US tax is given. The answer depends on the LLC's operating agreement and HMRC's own analysis, so it should be settled before the first UK return is filed.
Is the penalty really charged on a company that did nothing wrong except forget a form?
The penalty is $25,000 per form and it is assessed on late or missing filings, including for LLCs with no taxable income. Reasonable cause can be argued, and the delinquent information return procedures exist for exactly this situation. Relief is not automatic. It depends on the facts, the explanation and whether the filing is brought up to date before the IRS makes contact.
Primary sources
What this page says is drawn from the official material below. Read it yourself; we would rather be checked than trusted.
Last reviewed
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