Since 2017, a US LLC with a single foreign owner has an annual IRS filing even if it earns nothing in the US. The form is 5472, it is attached to a pro forma Form 1120, and the penalty for not filing is $25,000. It cannot be filed without an EIN. This guide explains the requirement in plain terms and why the EIN is the first thing to sort out.
Who has to file
A "foreign-owned US disregarded entity," which in practice means a single-member LLC formed in a US state, owned by a non-US person (an individual or a company), that has not elected to be taxed as a corporation. The IRS treats such an LLC as a corporation for the limited purpose of the Form 5472 reporting rules.
If the LLC had any "reportable transaction" with its foreign owner or related parties during the year, it must file. Reportable transactions are defined very broadly and include capital contributions, loans, payments of expenses on behalf of the LLC, and distributions. Simply funding the LLC's bank account from your personal account counts. In practice nearly every active foreign-owned single-member LLC has to file every year.
Multi-member LLCs are partnerships by default and have a different filing (Form 1065 with Schedules K-1), which also requires an EIN.
What gets filed
- Form 1120, pro forma: only the name, address, EIN, and a few identifying items are completed. It is a cover sheet.
- Form 5472: identifies the LLC, the foreign owner, and the reportable transactions with amounts.
The package is filed by mail or fax to a specific IRS address, not electronically. Due date is generally April 15 for calendar-year entities, with an extension available via Form 7004.
Why the EIN matters here
Form 1120 and Form 5472 both require the LLC's EIN. The IRS will not process the filing without it. If you formed the LLC in November, you have a filing due the following April, and if the EIN takes 8 weeks to arrive by fax, you are already cutting it close. Getting the EIN right after formation removes the problem.
The penalty
$25,000 per form per year for failing to file, filing late, or filing incomplete information, with additional penalties if the failure continues after IRS notice. The IRS has applied this to small, dormant LLCs. There is a reasonable-cause relief procedure, but relying on it is not a plan.
Record keeping
The LLC must keep records sufficient to establish the correctness of the filing: bank statements, records of contributions and distributions, and invoices between the LLC and its owner. A separate business bank account, which you need the EIN to open, makes this much easier.
Practical checklist for a new foreign-owned single-member LLC
- Form the LLC and keep the stamped certificate.
- Obtain the EIN. With SwiftEIN, 72 hours or less for 99% of orders.
- Open a business bank account using the 147c letter.
- Keep personal and business money separate from the first day.
- Engage a US tax professional before year end to prepare Form 5472 and the pro forma 1120.