Your U.S. LLC made $0. The IRS penalty for one missing form is still $25,000.

Zero income. Zero sales. Zero tax owed. Still a $25,000 penalty — because a form was never sent. If you live outside the United States and own a single-member U.S. LLC, the IRS still expects a filing for every year the LLC has reportable transactions — Form 5472, attached to a pro forma Form 1120 — even if the LLC earned nothing and owes no tax. Miss it, file it late, or file it substantially incomplete, and the penalty stated in the IRS instructions is $25,000.

What is Form 5472?

Form 5472 is an IRS information return. In the IRS’s words, it is used “to provide information required under sections 6038A and 6038C when reportable transactions occur during the tax year of a reporting corporation with a foreign or domestic related party.” It is not an income tax return, and the penalty for missing it does not depend on how much tax you owe.

Who has to file Form 5472?

A reporting corporation — which includes a foreign-owned U.S. disregarded entity — generally must file Form 5472 if it had a reportable transaction with a foreign or domestic related party — for these LLCs, the related party is usually you, the foreign owner. A foreign-owned U.S. disregarded entity is a domestic disregarded entity that is wholly owned by a foreign person. A common example is a single-member U.S. LLC owned entirely by a non-U.S. person who has not elected corporate tax treatment for the LLC.

For those entities, the IRS instructions are specific: even though the disregarded entity has no income tax return filing requirement of its own, it must file a pro forma Form 1120 with Form 5472 attached — a stripped-down cover return, not a full corporate tax return — by the due date (including extensions) of that Form 1120. The only information required on that pro forma Form 1120 is the entity’s name and address and items B and E on the first page, and “Foreign-owned U.S. DE” is written across the top.

Why does “we made no money” not end it?

Because the trigger is a reportable transaction, not profit. For a foreign-owned disregarded entity, the IRS instructions list reportable transactions that include amounts paid or received in connection with:

• the formation of the entity — including contributions to it;
• distributions from the entity; and
• its dissolution, acquisition, and disposition.

In plain English: putting your own money into the LLC when you formed it, or taking money out of it, can be a reportable transaction, even in a year when the LLC had no sales at all.

That is the trap. A founder can owe no U.S. income tax, have no customers, and still have a Form 5472 filing for that year.

How much is the Form 5472 penalty?

The IRS instructions state it plainly: “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 also applies for failure to maintain the required records. And the instructions add a line every filer should know: “Filing a substantially incomplete Form 5472 constitutes a failure to file Form 5472.”

The math stacks by year and by related party. Each tax year is a separate filing, so — as an illustration of the arithmetic, not a prediction about any one case — two missed years for one foreign owner would be two $25,000 penalties, or $50,000, before any continuation penalty is considered.

What happens if you wait after the IRS writes to you?

Waiting is the most expensive option in the instructions. If the failure continues for more than 90 days after notification by the IRS, an additional penalty of $25,000 applies for each related party, for each 30-day period (or part of a 30-day period) during which the failure continues after that 90-day period ends — it keeps adding up for as long as the failure continues. Criminal penalties may also apply in some cases for failure to submit information or for filing false or fraudulent information.

When is Form 5472 due?

Form 5472 is filed as an attachment to the reporting corporation’s income tax return by the due date (including extensions) of that return. A foreign-owned disregarded entity can request an extension by filing Form 7004 by the regular due date of the return. Form 7004 is the extension request. For calendar-year filers on extension for the 2025 tax year, that extended due date — the due date (including extensions) of the pro forma Form 1120 — has now passed, which is why this form is in the news this week. A foreign-owned disregarded entity cannot file Form 5472 electronically; the instructions direct those filers to the IRS’s dedicated fax and mailing address in Ogden, Utah.

Already missed a year?

Do not wait for an IRS notice to find out where you stand — the continuation penalty above only starts after the IRS notifies you, and it grows every 30 days from there. Whether a late filing can potentially reduce or avoid a penalty depends on the specific facts of the case, and no outcome can be promised for any individual filer. That fact-specific review is exactly what a first call is for.

What should you do first?

One step: if you are a foreign owner of a U.S. LLC and you are not sure a Form 5472 was filed for every year the LLC has existed, get a licensed CPA to check the filing history against the years, the ownership, and the transactions between you and the LLC. TAX CPA works with clients in all 50 states and with U.S. taxpayers and foreign owners abroad, online. The first call is free.

Alex Volkov, CPA is a New York-licensed CPA with over two decades in accounting, focused on resolving IRS tax problems — back taxes, liens, levies, garnishments, and audits — for individuals and businesses nationwide.