How to File Form 5472: Reporting for Foreign-Owned Corporations

Form 5472 is an information return required for US corporations that are at least 25% foreign-owned or foreign-owned disregarded entities. You must file Form 5472 attached to Form 1120 by April 15 (or October 15 with extension) reporting all transactions with foreign related parties. Failure to file carries a mandatory $25,000 penalty per form with no maximum limit. Foreign-owned single-member LLCs must file even with zero income.

Foreign investors establishing US businesses face complex reporting requirements that many discover too late. You formed a US LLC, obtained an EIN, opened a bank account, and started operations. Everything seemed straightforward until you learned about Form 5472—a form carrying a minimum $25,000 penalty for non-compliance.

Without understanding how to file Form 5472 correctly, you risk severe penalties that accumulate indefinitely, IRS audits with no statute of limitations, and compliance failures that can cost hundreds of thousands of dollars. 

In this article you will learn what Form 5472 is and what it's used for, who must file Form 5472 and the 25% ownership rules, what reportable transactions must be included with common mistakes to avoid. 

What is Form 5472 used for?

Form 5472 (Information Return of a 25% Foreign-Owned U.S. Corporation) is an information return that reports transactions between certain US corporations and their foreign related parties. The IRS uses Form 5472 to monitor transactions between US entities and foreign related parties.

This helps prevent tax avoidance through transfer pricing manipulation, ensures proper documentation of related-party transactions, tracks capital flows between foreign owners and US businesses, and maintains compliance with international tax treaties.

When the requirement began

The Form 5472 requirement for foreign-owned disregarded entities began in 2017 following Treasury regulations finalized in December 2016. Prior to 2017, only corporations filed Form 5472. The regulations extended the requirement to single-member LLCs and other disregarded entities wholly owned by foreign persons.

Who must file Form 5472?

Understanding who must file Form 5472 determines whether you have this reporting obligation.

25% foreign-owned US corporations

You must file Form 5472 if your US corporation is at least 25% foreign-owned and has reportable transactions with foreign related parties. A 25% foreign-owned corporation means one or more foreign shareholders directly or indirectly own at least 25% of the company at any time during the tax year.

Ownership is calculated by vote or value, whichever gives the greater percentage. Both direct and indirect ownership count toward the 25% threshold.

Foreign-owned disregarded entities

Foreign-owned disregarded entities must file Form 5472 even if they have no income tax filing obligation. A disregarded entity is a business structure (typically a single-member LLC) that exists as a separate legal entity but is ignored for federal income tax purposes.

For foreign-owned disregarded entities, this includes:

• Single-member LLCs owned by a foreign person,
• Entities owned entirely through disregarded entities by one foreign person
• Entities owned through grantor trusts by one foreign person.

 

Summary table: 

 

Entity Type	Ownership Threshold	Filing Requirement	Pro Forma 1120 Needed?
25% foreign-owned US corporations	≥25% foreign ownership (direct or indirect)	File if reportable transactions exist	No (file regular Form 1120)
Foreign corporations	Engaged in US trade or business	File if reportable transactions exist	No (file Form 1120-F)
Foreign-owned disregarded entities	100% foreign-owned single-member LLC	File even with zero income or transactions	Yes

 

What transactions must be reported on Form 5472?

Form 5472 requires reporting all transactions between the reporting corporation and foreign related parties during the tax year. There is no de minimis threshold—all transactions must be reported regardless of amount.

Monetary transactions

Here are the key things you must report: 

• Sales and purchases of inventory, tangible property, and intangible property rights.
• Fees for management, technical, engineering, consulting, legal, IT, marketing, and administrative services. 
• Rent paid or received for office space, equipment, and vehicles.
• Royalties for trademarks, patents, trade names, and know-how. 
• Interest on intercompany loans, shareholder loans, and all financing arrangements.
• Sales commissions, referral fees, and agent payments. 
• Premiums paid or received for insurance or reinsurance.

Non-monetary transactions

Here are the key non-monetory transactions you must report: 

• Report initial investments when the LLC is formed, additional capital infusions, and property contributed to the entity. 
• Report cash distributions to owners, property distributions, and deemed distributions.
• Report transfer of assets without payment, contribution of property, and use of owner's property by the entity. 
• Report loans between the entity and foreign owner even if no interest is charged.

Summary table:

Transaction Category	Monetary Examples	Non-Monetary Examples
Property transactions	Sales/purchases of inventory, tangible property, intangible property rights	Property contributed to entity, use of owner's property by entity
Service fees	Management, technical, engineering, consulting, legal, IT, marketing, administrative services	—
Rental arrangements	Rent paid/received for office space, equipment, vehicles	—
Intellectual property	Royalties for trademarks, patents, trade names, know-how	Transfer of IP rights without payment
Financial arrangements	Interest on loans, insurance premiums, commissions	Interest-free loans between entity and owner
Capital transactions	—	Initial investments, capital infusions, cash distributions, property distributions

What is a "related party"?

Understanding who qualifies as a related party determines which transactions you must report on Form 5472.

Direct 25% foreign shareholders

Any foreign person (individual or entity) who directly owns 25% or more of the US corporation's stock by vote or value is a related party. All transactions between the US corporation and this shareholder must be reported.

Indirect 25% foreign shareholders

Foreign persons who indirectly own 25% or more through other entities are related parties. Indirect ownership is calculated through ownership chains.

Example: Foreign Individual A owns 100% of Foreign Company B. Foreign Company B owns 30% of US Corporation C. Individual A indirectly owns 30% of US Corporation C and is a related party.

Entities related to 25% shareholders

Any entity in which a 25% foreign shareholder owns 25% or more is also a related party to the US corporation.

Example: Foreign Individual owns 40% of US Corporation and 50% of Foreign Company. Foreign Company is a related party to US Corporation because the same person owns 25%+ of both.

Family attribution

Related parties include family members of 25% foreign shareholders, specifically:

• Spouse
• Parents
• Children
• Grandchildren

If a 25% foreign shareholder's spouse or child transacts with the US corporation, those transactions must be reported on Form 5472.

 

Scenario	Related Party?	Must Report?
Foreign owner contributing capital to US LLC	Yes - direct owner	Yes
Foreign owner's spouse receiving consulting fees from US LLC	Yes - family attribution	Yes
Foreign company owned by same person who owns US corporation	Yes - common ownership	Yes
Foreign company that owns 30% of US corporation	Yes - direct shareholder	Yes
Unrelated third-party vendor in foreign country	No	No

 

Attribution rules for determining ownership

The IRS uses complex attribution rules to determine whether an entity meets the 25% foreign ownership threshold. You must consider both direct and indirect ownership.

Direct ownership

Direct ownership is straightforward, the percentage of stock actually owned. If Foreign Individual A owns 30% of US Corporation's stock, that's 30% direct ownership.

Indirect ownership through entities

Ownership through other entities is calculated proportionately by multiplying ownership percentages.

Constructive ownership through family

Stock owned by family members is attributed to you for determining the 25% threshold:

• Stock owned by your spouse is attributed to you
• Stock owned by your children, grandchildren, or parents is attributed to you

Example: Foreign Individuals own 15% of US Corporation directly. An individual's spouse owns 12% directly. For determining related party status, an individual is treated as owning 27% (15% + 12%), meeting the 25% threshold.

Attribution from partnerships and trusts

Stock owned by partnerships is attributed proportionately to partners. Stock owned by trusts is attributed to beneficiaries based on their beneficial interest.

Multiple attribution layers

Attribution can occur through multiple layers simultaneously, combining direct, indirect, and constructive ownership.

Why attribution matters

Attribution rules often reveal related party relationships that aren't immediately obvious. Many filers miss Form 5472 requirements because they only consider direct ownership without applying attribution rules.

Form 5472 instructions: How to fill out Form 5472

Understanding how to file Form 5472 requires completing each section accurately.

Completing Form 5472 accurately requires systematic attention to each section's specific requirements.

Part I: Reporting Corporation Information

Provide comprehensive entity identification:

• Legal name exactly as registered with your state
• Complete physical address (PO boxes are insufficient)
• Employer identification number (EIN) issued by the IRS
• Country of incorporation or formation
• Check the appropriate classification box:
• Box 1a: 25% foreign-owned US corporation
• Box 1b: Foreign corporation engaged in US trade or business
• Box 1c: Foreign-owned disregarded entity filing pro forma return

Part II: 25% Foreign Shareholder Information

List every foreign person meeting the 25% ownership threshold at any time during the tax year. Multiple shareholders require separate entries.

For each qualifying shareholder provide:

• Complete legal name (individual name or entity legal name)
• Full address including country
• Country of citizenship (individuals) or incorporation (entities)
• Foreign tax identification number or US taxpayer identification number if available
• Percentage of ownership by vote
• Percentage of ownership by value
• Dates when ownership was acquired or changed

Part III: Related Party Information

Identify each related party with whom the reporting corporation conducted transactions. File separate Form 5472 for each related party.

Provide complete identification:

• Related party's legal name
• Complete address including country
• Identifying number (foreign tax ID, US TIN, or reference number)
• Relationship to reporting corporation by checking appropriate boxes:
• 25% direct foreign shareholder
• Indirect 25% foreign shareholder
• Related to 25% foreign shareholder
• Other relationship category

Part IV: Monetary Transactions

Report aggregate amounts for each transaction category. Use two columns:

• Column (a): Transactions with the specific related party identified in Part III
• Column (b): Transactions with all other foreign related parties

Lines 1-12: Amounts Received

• Sales of stock in trade (inventory)
• Sales of tangible property other than stock in trade
• Rents received
• Royalties received
• Sales of intangible property rights
• Consideration received for technical, managerial, engineering, construction, or similar services
• Commissions received
• Insurance premiums received
• Other amounts received

Lines 13-23: Amounts Paid

• Purchases of stock in trade (inventory)
• Purchases of tangible property other than stock in trade
• Rents paid
• Royalties paid
• Purchases of intangible property rights
• Consideration paid for technical, managerial, engineering, construction, or similar services
• Commissions paid
• Insurance premiums paid
• Interest paid
• Other amounts paid

Are there separate forms for multiple related parties?

You must file a separate Form 5472 for each related party with whom you had transactions. If you transacted with three different foreign related parties, you file three separate Forms 5472.

How to file Form 5472: Filing procedures and deadlines

Following correct filing procedures ensures timely compliance.

Filing deadline

Form 5472 is due on the same date as the reporting corporation's income tax return, including extensions. For calendar-year corporations, the deadline is April 15 (or October 15 if you file Form 7004 requesting an extension).

Attach to Form 1120

Form 5472 must be attached to Form 1120 (US Corporation Income Tax Return) or Form 1120-F (Foreign Corporation Income Tax Return). The forms are filed together as a package.

Pro forma Form 1120 for disregarded entities

Foreign-owned disregarded entities that do not otherwise file Form 1120 must file a pro forma Form 1120 with Form 5472 attached. A pro forma Form 1120 is a simplified version of the corporate tax return containing limited information: the entity's name, EIN, address, check the box indicating it's a pro forma filing, and attach Form 5472.

What if I missed prior years?

You must immediately file if you have missed prior years.  File Form 5472 for all years since the entity was formed or since 2017 (when the requirement began for disregarded entities), whichever is later. There is no statute of limitations on Form 5472 penalties—the IRS can assess penalties indefinitely until you file.

Example: Your foreign-owned LLC was formed in 2019 but you never filed Form 5472. In 2026, you discover the requirement. You must file a pro forma Form 1120 with Form 5472 for tax years 2019, 2020, 2021, 2022, 2023, 2024, and 2025—seven years of delinquent filings.

Penalty exposure calculation

Each missed year carries a $25,000 penalty per related party. If you transacted with two related parties annually for five years, potential penalties reach $250,000 ($25,000 × 2 forms × 5 years).

Steps to come into compliance:

1. Gather all transaction records for each delinquent year.
2. Prepare pro forma Form 1120 for each year (for disregarded entities). 
3. Complete Form 5472 for each related party for each year. 
4. File all delinquent returns immediately. 
5. Include a reasonable cause statement explaining why you failed to file (lack of knowledge, reliance on incorrect advice, etc.).

Reasonable cause penalty relief

The IRS may waive penalties if you demonstrate reasonable cause. Valid explanations include genuinely not knowing about the filing requirement, relying on incorrect advice from a tax professional, or confusion about whether the requirement applied to your entity type. The key is demonstrating good faith, you weren't intentionally avoiding the requirement.

Voluntary filing before IRS contact significantly improves your chances of penalty relief.

Can I file Form 5472 online?

Yes, Form 5472 can be filed electronically through IRS-approved Modernized e-File (MeF) providers when attached to Form 1120. However, foreign-owned disregarded entities filing pro forma Form 1120 with Form 5472 cannot file electronically. These must be mailed or faxed to the IRS.

Where to mail Form 5472

For entities that cannot e-file, mail Form 5472 (attached to pro forma Form 1120) to:

Department of the Treasury
Internal Revenue Service Center
Ogden, UT 84201-0024

Alternatively, fax to: (855) 887-7737.

 

What is the Form 5472 penalty?

Understanding Form 5472 penalties helps you appreciate the importance of timely, accurate filing.

Base penalty: $25,000 per form

The IRS assesses a $25,000 penalty for each Form 5472 that is not filed when required, filed late, filed incompletely, or filed inaccurately. The penalty applies per form, per year. If you must file three Forms 5472 (one for each related party) and fail to file all three, you owe $75,000 in penalties.

Continuing penalties: Additional $25,000 every 30 days

If you fail to file within 90 days after the IRS issues a notice, additional $25,000 penalties accrue every 30 days with no maximum limit. Penalties apply per form, per year. Failing to file for multiple years creates massive exposure.

Common Form 5472 filing mistakes

Avoiding common errors ensures successful compliance.

Mistake #1: Not filing for disregarded entities. The most common mistake is believing single-member LLCs don't need to file Form 5472. Foreign-owned disregarded entities must file pro forma Form 1120 with Form 5472 attached, regardless of income or activity.

Mistake #2: Missing non-monetary transactions. Many filers report only monetary transactions. You must report capital contributions, distributions, interest-free loans, and use of property—even if no money changes hands.

Mistake #3: Filing one form for multiple shareholders. You must file a separate Form 5472 for each foreign related party. Filing a single form listing multiple parties is incorrect and incomplete.

Mistake #4: Attempting to e-file disregarded entity returns. Foreign-owned disregarded entities cannot e-file pro forma Form 1120 with Form 5472. These must be mailed or faxed.

How NSKT Global helps with Form 5472 filing

NSKT Global specializes in Form 5472 compliance for foreign-owned US businesses. Our services include eligibility analysis, pro forma Form 1120 preparation, transaction identification, complete Form 5472 preparation for each required related party, delinquent filing assistance, reasonable cause statement preparation for penalty relief, and ongoing annual filing support.

Whether you need to understand filing requirements, address missed prior-year filings, or establish systematic compliance, NSKT Global provides specialized expertise to protect your business from substantial penalties while ensuring full regulatory compliance.

People Also Ask

Do I need Form 5472 if my LLC has no income? 

Yes. Foreign-owned disregarded entities must file Form 5472 with pro forma Form 1120 regardless of income, expenses, or activity level.

What happens if I never filed Form 5472? 

You face $25,000 penalties per form per year, with no statute of limitations. The IRS can assess penalties indefinitely until you file.

Can Form 5472 penalties be waived? 

Yes, if you demonstrate reasonable cause for failure to file. Valid reasons include not knowing about the requirement or relying on incorrect professional advice.

Does Form 5472 require payment of taxes? 

No. Form 5472 is an information return only. It doesn't calculate or require tax payment, but failure to file triggers penalties.

How many years back do I need to file Form 5472? 

You should file for all years since the entity was formed or since 2017 (when the requirement began for disregarded entities), whichever is later.