Definition
What is IRS Form 5472?
Form 5472 is an IRS information return required from US corporations and LLCs with 25%+ foreign ownership. Reports related-party transactions between US entity and foreign owners. Penalty: $25,000 for non-compliance.
Who files it
Who must file?
- US corporations with 25%+ foreign shareholder
- Foreign-owned US LLCs (disregarded entities)
- Required if entity had reportable transactions with related parties during year
- Even US-disregarded single-member LLCs with foreign owner must file pro-forma Form 1120 + Form 5472
What to report
What gets reported?
All transactions between US entity and foreign related parties:
- Sales/purchases of goods, services
- Rent, royalty payments
- Interest income/expense, loans
- Commissions
- Insurance premiums
- Capital contributions and distributions
- Compensation, fees for services
- Any transaction creating tax effect
Penalties
Penalties.
- $25,000 initial penalty per missed Form 5472
- $25,000/month additional if continued non-compliance after notice
- No reasonable-cause defence — penalty is mechanical
- Cannot be waived by IRS without exceptional circumstances
- Take this very seriously