Form 5472: what happens if you don't file.

If a non-US person owns a US LLC, the IRS wants to know about it every single year, on a specific form, whether or not the company made a dollar. Miss it, and the penalty starts at $25,000. Not $25,000 in tax. $25,000 for the paperwork, before any tax owed is even calculated.

This is the single most expensive thing we see foreign founders get wrong, and it usually happens for an understandable reason: nobody told them the form existed.

Who actually has to file

Form 5472 applies to a US corporation that is 25% or more foreign-owned, and to a foreign-owned US LLC that is disregarded for federal tax purposes (the common case for a single-member LLC owned by one non-US person). The trigger is foreign ownership plus a reportable transaction with that owner, and the definition of a reportable transaction is wide: capital contributions, loans, payments for services, even the initial funding that formed the company can count.

That last point catches almost everyone. Founders assume that because the LLC has not started trading, there is nothing to report. In practice the money you put in to register the company and open the bank account is very often itself the reportable transaction that triggers the filing requirement in year one.

What the penalty actually is

There is no proportionality to revenue anywhere in this. A dormant LLC that has never invoiced a customer owes the identical $25,000 as one with six figures of turnover, because the penalty attaches to the failure to disclose the transaction, not to any tax that was underpaid.

"But my LLC had zero income"

This is the question we hear the most, and the honest answer is uncomfortable: zero income does not mean zero filing obligation. The obligation is about the ownership structure and the transactions between the LLC and its owner, not about profit. A dormant, pre-revenue LLC formed by a non-US founder still generally has to file Form 5472, attached to a pro-forma Form 1120 used purely as a transmittal, every year the company exists and had a reportable transaction.

Filing the pro-forma 1120 alongside Form 5472 does not change how the LLC is taxed. It is a disclosure mechanism, not an election into corporate tax treatment.

What reasonable-cause relief actually requires

The penalty can be abated, but only through reasonable-cause relief, and the bar is specific: you have to show you exercised ordinary business care and prudence and still could not comply on time. Genuinely not knowing US filing rules exist is a common story, but on its own it is thin ground, not automatic relief. What tends to help is a documented, active attempt to comply that was frustrated by something outside your control, and the request generally has to be made in writing, attached to the late filing itself, not after the fact once a notice arrives.

This is exactly the kind of judgment call worth paying a licensed preparer for, once. The preparer's fee is a rounding error next to $25,000.

The filing deadline, and what to do if you have already missed it

Form 5472 is due with the LLC's income tax return, which for a calendar-year filer is generally April 15, with an extension available to October 15 if requested in time. If a prior year was missed entirely, the generally recommended path is to file it now, as soon as possible, with a reasonable-cause statement attached, rather than waiting for the IRS to notice first. Waiting does not reduce the exposure and removes the strongest form of the reasonable-cause argument, which is that you corrected it voluntarily.