File Form 5472, without triggering a USD 25,000 penalty.

Form 5472 (Information Return of a 25% Foreign-Owned US Corporation or a Foreign Corporation Engaged in a US Trade or Business) is required where either:

• A US corporation is 25%+ foreign-owned (directly or by attribution) and has reportable transactions with a related party, OR
• A foreign-owned US disregarded entity — typically a single-member LLC with a non-US owner — has reportable transactions with its foreign owner or any related party.

The disregarded-entity rule is the trap for Indian founders. A Delaware LLC with an Indian individual as single member is a disregarded entity for US federal tax — it files no Form 1040 of its own and the owner has no US tax liability where there is no US-source income. But since the 2017 regulations (TD 9796), that disregarded LLC is treated as a reporting corporation for Form 5472 purposes and must file.

Reportable transactions include: any contribution of capital by the foreign owner to the LLC, any distribution, any inter-company payment, any loan or interest payment, any shared services. In practice almost every active LLC has at least one reportable transaction with the foreign owner each year — the capital funding of the US bank account alone qualifies.

A foreign-owned disregarded LLC files:

1. Pro forma Form 1120 — the US corporate income tax return skeleton. Only the identifying information section (name, EIN, address, foreign owner identification) is completed. Income, deductions, and tax lines remain blank because the LLC is disregarded for income-tax purposes. Mark the form 'FOREIGN-OWNED US DE' at the top.
2. Form 5472 — the information return reporting the related-party transactions. One Form 5472 per related party is required.
3. Both are filed together as a single filing packet.

The LLC needs an EIN (Employer Identification Number) to file. If you incorporated via Stripe Atlas or a direct Delaware filing, the EIN is already in place. If not, Form SS-4 is used to obtain the EIN — the standard route for non-SSN applicants is fax or international phone, taking 4-8 weeks.

Due date: 15th day of the 4th month following the end of the LLC's tax year. For a calendar-year LLC: 15 April. Automatic 6-month extension via Form 7004 — moves the due date to 15 October.

Filing method: paper filing to the Ogden, Utah IRS service center address specified on the Form 5472 instructions. The IRS does not accept e-file for foreign-owned disregarded entity 5472 filings as a standalone package — it must be mailed.

Processing time: the IRS does not acknowledge receipt. US Postal Service Certified Mail + Return Receipt, or an international courier with tracking, is the only way to prove filing.

The Form 5472 penalty is USD 25,000 per form per year under IRC Section 6038A — automatic, not discretionary, and generally not reduced for first-time offenders. Separate penalty for each year not filed.

Common failures:

• Didn't know it existed. The Indian founder relied on a Stripe Atlas incorporation and never saw a 5472 reminder. The LLC has no US income, so the founder assumed no US filing was due.
• Filed Form 1120 only. The CA treated the LLC like a C-Corp and filed a full 1120 with zero income, missing the 5472 companion. The 5472 non-filing penalty still applies.
• Missed the 'any reportable transaction' threshold. Even a USD 500 contribution of initial capital qualifies. Dormant LLCs with the single capital contribution still need to file for that year.
• Named the related party wrong. Form 5472 asks for the foreign owner's identification details. A missing or incorrect foreign TIN / country is enough to invalidate the filing in a 6038A examination.

If you have missed prior years, voluntary filing of back years before the IRS reaches out is the standard approach. Each back year still carries the penalty, but late-but-voluntary filers sometimes negotiate reduced penalties on reasonable-cause grounds.