Form 5472: Everything You Need to Know to Stay Compliant with the IRS

If you own a U.S. company with foreign participation—or you are a foreign owner of a single-member LLC—Form 5472 is a key requirement for staying on the right side of the IRS. This informational return lets the U.S. government monitor transactions between domestic entities and foreign‐related parties and helps prevent tax evasion.

Below, we at Openbiz explain what Form 5472 is, who must file it, what information it requires, and the penalties for failing to comply.

What Is Form 5472?

Form 5472 is an information report that certain U.S. corporations and foreign-owned entities must file with the IRS. Its purpose is to disclose transactions carried out with foreign-related parties during the tax year—loans, capital contributions, sales of goods or services, and more.

The form is mandated under Internal Revenue Code §§ 6038A and 6038C and promotes transparency in international business activities involving U.S. companies with foreign ties.

Who Must File Form 5472?

Form 5472 applies to two main groups:

1. U.S. corporations with foreign ownership
   A corporation must file the form if a foreign person owns at least 25 % of its voting stock or total value.
2. Single-member LLCs with a foreign owner (Disregarded Entities)
   If you are a non-U.S. person who owns a single-member LLC and the LLC engages in reportable transactions, you must file Form 5472.

The requirement covers entities operating directly in the United States as well as those that do business in the U.S. even if they are not tax residents.

‍

‍

What Must Be Reported on Form 5472?

You must disclose a variety of transactions with foreign-related parties, including:

• Capital contributions
• Loans to or from related foreign parties
• Payments for technical, administrative, or management services
• Purchases or sales of goods or property
• Payments of interest, royalties, rents, or commissions

The form also asks for detailed information on the reporting entity, the foreign owner, and any related parties: names, addresses, tax-residence countries, relationship type, and more.

How to Complete and File Form 5472

Filing Form 5472 accurately requires careful bookkeeping. Follow these basic steps:

1. Obtain an EIN (Employer Identification Number). Every entity filing Form 5472 needs an IRS-issued tax ID.
2. Gather the required data. Collect details on the company, foreign shareholders, related parties, and every reportable transaction.
3. Complete the form. Download the current Form 5472 from the IRS website and fill it out according to the instructions.
4. Attach it to Form 1120. Corporations and disregarded LLCs must submit Form 5472 together with Form 1120 (for single-member LLCs, Form 1120 is only a filing vehicle, not an income-tax return).
5. Meet the deadline. The standard due date is April 15 of the year following the close of the tax year; you may request an extension to October.

What Happens if You Don’t File Form 5472?

Failure to file, filing late, or submitting an incomplete Form 5472 carries stiff penalties:

• Initial fine of US $25,000
• Additional fines if the issue is not corrected within 90 days of IRS notice
• Potentially larger civil or even criminal penalties if fraud is involved

Proper assistance is essential to avoid these costly consequences.

Benefits of Filing Form 5472 Correctly

While it may seem like just another piece of paperwork, filing Form 5472 accurately yields major advantages:

• Proves your company’s tax compliance to the IRS
• Prevents fines that could hurt your cash flow
• Helps you track and organize international operations
• Enhances your reputation with banks, partners, and investors

Tips to Avoid Mistakes When Filing Form 5472

Here are some best practices from Openbiz:

• Keep a detailed log of every transaction with foreign-related parties throughout the year.
• Make sure the amounts you report match your accounting records.
• Double-check names, addresses, and identification numbers for all foreign parties.
• Consult a specialist whenever you are unsure whether a transaction is reportable.

‍

‍

Frequently Asked Questions About Form 5472

Do multi-member LLCs with foreign owners have to file Form 5472?
Not automatically. Form 5472 is required for single-member foreign-owned LLCs and for corporations with 25 % or more foreign ownership. A multi-member LLC may face other obligations depending on its tax classification.

What if I had no reportable transactions this year?
If your entity is subject to Form 5472 but had no reportable transactions, filing is still advisable to document this fact and avoid future issues.

Can I submit Form 5472 electronically?
Yes. Form 5472 must be filed together with Form 1120 through the IRS e-filing system. Follow the technical guidelines to ensure a valid submission.

Which transactions are not reportable?
Purely internal transactions that have no financial impact generally do not need to be reported, but you should evaluate each case carefully—the IRS definition of a reportable transaction is broad.

Trust Openbiz with Your U.S. Tax Compliance

Managing a U.S. business from abroad can be challenging. Openbiz guides you through every step of filing Form 5472, keeping your company compliant and free from avoidable penalties.

Ready to simplify your tax obligations? Book a free consultation with our team and secure your success in the United States.