Form 5472
Definition
Form 5472 (Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign-Owned U.S. Disregarded Entity) is a mandatory IRS informational form. It must be filed annually by any single-member LLC that is 100% owned by a non-US person. The form is used to report "reportable transactions" between the foreign owner and the LLC.
Why it matters
This form is a massive trap for foreign entrepreneurs. Because a foreign-owned single-member LLC with no US operations often owes $0 in US income tax, many foreign founders assume they do not need to file anything with the IRS. However, the IRS requires Form 5472 regardless of tax liability. Failure to file this form by April 15 carries a mandatory $25,000 penalty.
Note: Form 5472 must be physically attached to a "Pro forma" Form 1120 and either mailed or faxed to the IRS.
Example
Matteo lives in Italy and forms a Wyoming LLC for his e-commerce store. He has no US office or employees, so he owes no US federal income tax. However, during the year, Matteo wired $1,000 from his personal Italian bank account to the LLC to open the account, and later took out $50,000 in profits. These are "reportable transactions." Matteo must file Form 5472 by April 15 to report these transfers, or face a $25,000 fine.