Form 5472 + pro forma 1120 for foreign-owned US LLCs

A US single-member LLC is usually a disregarded entity: for income tax, the IRS looks through it to the owner. But if the only owner is a foreign person, such as a nonresident alien, the LLC is treated as a corporation for one purpose: reporting under IRC §6038A (Treas. Reg. §301.7701-2(c)(2)(vi)). In practice, that means Form 5472 attached to a pro forma Form 1120. What counts as a reportable transaction (Treas. Reg. §1.6038A-2(b)(3)): • money you put into the LLC (contributions) and money you take out (distributions); • LLC expenses you pay personally: state fees, registered agent, bank fees, software; • loans between you and the LLC, interest, payments for services, rent, sales; • amounts tied to forming, buying, selling or closing the LLC. If the LLC had no reportable transactions with you or any other related party during the year, Form 5472 is not required (Treas. Reg. §1.6038A-2(e)). But formation costs you paid yourself are already a transaction, so the first year almost always needs a filing. The pro forma 1120 calculates no tax. Only the LLC's name and address and items B (EIN) and E on page 1 are filled in, and "Foreign-owned U.S. DE" is written across the top. The LLC needs its own EIN. How and when to file (Instructions for Form 5472): • A foreign-owned U.S. DE cannot e-file Form 5472. The package goes by fax to 855-887-7737 (300 DPI or higher) or by mail to: Internal Revenue Service, 1973 Rulon White Blvd, M/S 6112, Attn: PIN Unit, Ogden, UT 84201. • Due date: the 15th day of the 4th month after the tax year ends (April 15 for a calendar year). Form 7004, sent to the same fax or address by that date, gives 6 more months. • The LLC uses its owner's US tax year or, if the owner has none, the calendar year. What happens if you don't file: • $25,000 for each year, for each related party (IRC §6038A(d)(1); Treas. Reg. §1.6038A-4(a)). The penalty also applies if the required records are not kept. • If the failure continues more than 90 days after an IRS notice, another $25,000 for every 30 days, with no cap (IRC §6038A(d)(2)). • The IRS's time to assess tax related to that information does not run out until 3 years after the form is filed (IRC §6501(c)(8)). Keep bank statements, invoices and formation documents that support each transaction, at least for as long as the statute of limitations is open (Treas. Reg. §1.6038A-3). What else to keep in mind: • Form 5472 does not replace your personal return. If neither you nor the LLC is engaged in a US trade or business and you have no other US income that withholding did not fully cover, you usually do not file Form 1040-NR. If the LLC has effectively connected income (ECI), you generally must file 1040-NR (Treas. Reg. §1.6012-1(b)). • State filings are separate: annual reports and fees are set by the state where the LLC is registered, not by the IRS. • If you are a US tax resident (green card or substantial presence test), you are not a foreign person, and different rules apply.