Interactive Checklist

0 of 8 requirements met

1. Initial Setup

2. Annual IRS Filings (Crucial)

3. Ongoing Compliance

The $25,000 Mistake: Form 5472

Starting a US LLC from abroad is incredibly popular for non-US residents wanting access to Stripe, PayPal, and the US banking system. Wyoming and Delaware lead the nation in foreign LLC formations.

However, many non-US founders assume that because they do not have US income, they do not have to file anything with the IRS. This is completely false.

The Form 5472 Requirement

If your LLC is 100% owned by a non-US person (a foreign national) and is treated as a disregarded entity, it is subject to strict IRS reporting rules under Section 6038A of the tax code.

You must file Form 5472 attached to a pro forma Form 1120 every year by April 15. Form 5472 simply reports "reportable transactions" between the foreign owner and the LLC. This includes putting money into the LLC to fund it, or taking money out of the LLC as a distribution.

Warning: The IRS penalty for failing to file Form 5472, or filing it incorrectly, is a mandatory $25,000 fine. There is virtually no leniency for ignorance of the law.

Filing Taxes vs Paying Taxes

It is vital to understand the difference between a filing requirement and a tax liability. Filing Form 5472 does not mean you owe US income taxes.

If you operate an e-commerce store from Europe, sell digital products, and have no physical US presence (no US office, warehouse, or employees), your income is generally not considered "Effectively Connected Income" (ECI). Therefore, you owe $0 in US income tax. You still, however, must file the paperwork to report this fact to the IRS.

Disclaimer

This checklist is for educational purposes only. International tax law is complex. Always consult a licensed CPA or tax attorney who specializes in non-resident US taxation to ensure you meet all IRS obligations.