How it works
Form 5472 is filed by U.S. corporations that are 25 percent or more foreign-owned, foreign corporations engaged in a U.S. trade or business, and since 2017 foreign-owned single-member LLCs treated as disregarded entities. It reports transactions with related parties: loans, sales, rent, royalties, and for disregarded LLCs, capital contributions and distributions. Disregarded LLCs attach it to a pro forma Form 1120. The penalty is 25,000 dollars per form per year, with further penalties after IRS notice.
Why it matters
A non-resident who forms a U.S. LLC to hold property, accept payments, or run an online business usually has this obligation from year one and often learns of it from a penalty notice.
Related: Form 1120. Read more: Form 5472 for foreign-owned companies.
