Navigating U.S. tax rules can be complex, especially for foreign-owned U.S. businesses. One key form to know about is Form 5472. This guide explains who needs to file it, deadlines, and tips to stay compliant.
Who Needs To File Form 5472?
If your business fits any of these categories, you need to file Form 5472:
- 25% Foreign-Owned U.S. Corporation – If a U.S. corporation is at least 25% foreign-owned and has reportable transactions with its foreign shareholder(s), it must file Form 5472. A “25% foreign-owned” corporation means one or more foreign shareholders directly or indirectly own at least 25% of the company during the tax year.
- Foreign Corporations Operating In The U.S. – A foreign corporation conducting trade or business in the U.S. must file Form 5472 for reportable transactions with related parties. “Related parties” include direct and indirect 25% foreign shareholders or entities connected through ownership or control.
- Disregarded Entities (DEs) – If a U.S. disregarded entity (e.g., a single-member LLC) is fully owned by a foreign person, it must file Form 5472, even if it doesn’t need to file an income tax return.
Deadlines For Filing Form 5472
- Calendar-Year Corporations – If your corporation’s tax year ends on December 31, Form 5472 is due April 15 of the following year.
Example: For a tax year ending December 31, 2024, the filing deadline is April 15, 2025.
- Fiscal-Year Corporations – For businesses operating on a fiscal year (e.g., ending June 30), Form 5472 is due on the 15th day of the third month after the tax year ends.
Example: If your tax year ends on June 30, 2025, the filing deadline is September 15, 2025.
Important: Missing these deadlines can result in penalties.
Need More Time? Extension Options
You can request a 6-month extension by filing Form 7004. This moves the deadline for Form 5472 to October 15 (for calendar-year filers). However, keep in mind:
- Taxes owed are still due by the original deadline (e.g., April 15 for calendar-year taxpayers).
- Extensions only apply to filing, not payments.
Special Rules For Foreign-Owned Disregarded Entities
- Filing Requirements – Even if a foreign-owned U.S. disregarded entity (DE) doesn’t owe income tax, it must still file a pro forma Form 1120 with Form 5472 attached. The pro forma return acts as a cover page and only requires basic details like the entity’s name and address.
- Submission Method – Unlike most forms, DEs cannot file electronically. You must send Form 5472 by fax or mail to the IRS at the designated address or number (available on the IRS website).
Penalties For Non-Compliance
Failure to file Form 5472 or maintain proper records can lead to penalties of $25,000 per failure, with more added if non-compliance continues. To avoid these costs, stay on top of deadlines and keep detailed documentation.
Conclusion
Filing Form 5472 correctly and on time is essential for foreign-owned U.S. businesses. Know your deadlines, request extensions if necessary, and ensure compliance to avoid penalties.