Form 5472 and the $25,000 penalty most foreign LLC owners never hear about
By Mariam Raouf. Published 2026-09-04. 7 min read.
Most penalties in the US tax system scale with what you owe. This one does not. The Form 5472 foreign owned LLC penalty is a flat $25,000, and it applies to a company that made no money, has no customers and owes no tax.
That is the part people cannot believe. You can form a US LLC, move a few hundred dollars into its account to cover the registered agent, never trade, and still have a federal filing obligation with a five figure penalty attached to missing it.
The IRS wording is not open to interpretation: "A penalty of $25,000 will be assessed on any reporting corporation that fails to file Form 5472 when due and in the manner prescribed."
Below is who files, why a dormant company usually still has to, what you send and where, and how the penalty works.
Who has to file
The rule targets a specific and very common structure: a US limited liability company with one owner, where that owner is not a US person.
For most purposes the IRS ignores that kind of company. It is a disregarded entity, meaning its income is treated as the owner's. For this one purpose the treatment flips: a foreign owned US disregarded entity counts as a corporation under the reporting rules. That is why a company with one foreign member ends up filing a corporate form.
You are in scope if all of these are true:
- The entity is a US business entity, typically an LLC
- It has one owner for tax purposes
- That owner is a foreign person, a non US individual or a foreign entity
- The company had at least one reportable transaction in the tax year
That last condition is where almost everyone goes wrong.
Why a dormant LLC usually still has to file
Founders read "reportable transaction" and picture invoices, sales, contracts. Something commercial. Then they conclude a company with no revenue has nothing to report.
The IRS Instructions for Form 5472 define it much more broadly. For a foreign owned US disregarded entity, reportable transactions include "amounts paid or received in connection with the formation, dissolution, acquisition, and disposition of the entity, including contributions to, and distributions from, the entity."
Read that again with your own bank account in mind.
Money you put in is a contribution. Money you take out is a distribution. Paying the formation fee from your personal card is an amount paid in connection with the formation of the entity. Each is a reportable transaction between you and your company.
So the practical position is this: if you funded the company at all, in any amount, you have a filing obligation. An LLC that never received a cent and never spent one may fall outside the requirement, but that company is rarer than people assume.
Treat "we had no revenue so there is nothing to file" as the assumption that creates the penalty.
What you actually file
This is the second surprise. You do not file Form 5472 on its own.
You file a pro forma Form 1120, the US corporation income tax return, with Form 5472 attached. Pro forma here means you are not filing a real corporate return and not reporting corporate income. You are using the 1120 as an envelope.
The instructions are specific about how to mark it. Write "Foreign-owned U.S. DE" across the top of page 1 of the Form 1120. That exact phrase, in that place, is what tells the IRS what the filing is and stops it being processed as an ordinary corporate return.
On that pro forma 1120 you complete only the entity's name and address and items B and E. The rest is left alone. The substance is in the attached Form 5472, which asks about the foreign owner, the related parties, and the amounts involved in the reportable transactions.
The deadline is the Form 1120 due date for the tax year, including extensions.
Where to send it
These filings do not go to the ordinary corporate return address. The wrong one lands you in the "failed to file in the manner prescribed" category.
| What | Detail |
|---|---|
| Form to file | Pro forma Form 1120 with Form 5472 attached |
| Mark page 1 | Foreign-owned U.S. DE |
| Post to | Internal Revenue Service, 1973 Rulon White Blvd, M/S 6112 Attn: PIN Unit, Ogden, UT 84201 |
| Fax to | 855 887 7737 |
| Fax resolution | 300 DPI or higher |
| Due | The Form 1120 due date for the tax year, including extensions |
Source: IRS Instructions for Form 5472, revised December 2024. Checked September 2026.
Keep proof of what you sent and when. If you fax, keep the confirmation. If you post, use a service that evidences delivery. The penalty here is severe enough that proving you filed is worth a few extra dollars.
The penalty, precisely
The headline number gets attention, but the continuation penalty turns an oversight into a serious problem.
The IRS instructions state that a penalty of $25,000 will be assessed on any reporting corporation that fails to file Form 5472 when due and in the manner prescribed. The same penalty applies to failing to maintain the records the form requires.
Then the continuation piece. If the failure continues more than 90 days after the IRS notifies you, an additional $25,000 applies for each 30 day period, or fraction of a 30 day period, that it continues after that window.
| Stage | Amount |
|---|---|
| Failure to file when due, or not in the manner prescribed | $25,000 |
| Each 30 day period, or part of one, beyond 90 days after IRS notification | A further $25,000 |
Source: IRS Instructions for Form 5472.
Note the phrase "or fraction of". A single day into a new 30 day period counts as that whole period, and the arithmetic compounds quickly.
Note also "in the manner prescribed". Filing something is not automatically filing correctly. A 5472 sent without the pro forma 1120, without the required marking, or to the wrong address is exactly what that language covers.
What to do about it
Put the deadline in a calendar the day you form the company, not the day you remember it exists. This form has an annual rhythm and no reminder letter.
Keep a record of every movement of money between you and the company, in both directions, with dates and amounts. That record is the raw material for the form and it is what the records penalty refers to. A spreadsheet is enough. Doing it as you go takes minutes; reconstructing it eleven months later takes a weekend.
Then get a US tax preparer. This is general information, not tax advice, and I am not going to pretend otherwise. Anyone with a foreign owned single member LLC should use a preparer who has handled this filing before. Professional help is cheap next to a $25,000 mistake, and the rules interact with your own country's tax position in ways no article can assess.
If you have already missed a year, that is a conversation to have with a preparer promptly rather than a reason to keep quiet. The continuation penalty runs from IRS notification, so time is not neutral.
The uncomfortable summary
Nothing about this filing is intuitive. It is a corporate return you do not really file, attached to an information return you have never heard of, marked with a phrase you write by hand, posted to an address that appears on no other IRS form, for a company that may have made no money. That is why people miss it.
The formation services that sold you the LLC in twenty minutes mostly do not mention it, because it happens a year later and it is not their problem. The penalty is real and it does not care that the company was dormant.
At Calpir we build the operational and admin systems behind small companies, which includes making sure obligations like this one land in a calendar with an owner attached rather than in somebody's memory. We are not tax preparers and we will tell you to get one. For the rest of the sequence, start with how to open a US LLC as a non resident, then getting your EIN without an SSN, then the bank account step. Our operations and HR page covers the recurring admin side.
Frequently asked questions
Does a foreign owned LLC with no income have to file Form 5472?
Usually yes. The trigger is a reportable transaction, not revenue, and the IRS definition includes contributions to and distributions from the entity. Funding your own LLC's bank account or paying its formation costs is a reportable transaction, so a company with no sales normally still has a filing obligation for that year.
What is the penalty for not filing Form 5472?
$25,000 for failing to file when due and in the manner prescribed, per the IRS instructions. If the failure continues more than 90 days after IRS notification, a further $25,000 applies for each 30 day period or fraction of one after that. The same penalty applies to failing to maintain the required records.
Do I file Form 5472 by itself?
No. You attach it to a pro forma Form 1120 and write "Foreign-owned U.S. DE" across the top of page 1. Only the name and address and items B and E of the 1120 need completing. The package goes to the dedicated Ogden address or fax number rather than the normal corporate return address.
When is Form 5472 due for a foreign owned LLC?
It is due with the pro forma Form 1120, on the Form 1120 due date for the tax year, including any extensions you properly obtained. Because it rides on a corporate deadline rather than an individual one, the date catches out founders used to personal tax timelines at home.
Does this apply if my LLC has two owners?
The rules here apply to a foreign owned US disregarded entity, meaning a single owner LLC. A multiple owner LLC is normally taxed as a partnership and has different obligations, which may include reporting on foreign partners. Different form, same principle: check before the year ends rather than after.
Sources
- IRS Instructions for Form 5472, revised December 2024, for the filing requirement, the pro forma Form 1120 procedure, the Ogden address, the fax number and the penalty wording
- IRS Instructions for Form SS-4, for the EIN you need before any of this