Form 5472 is the information return of a U.S. company with a foreign owner or a foreign shareholder. After the Tax Cuts and Jobs Act of 2017, the changes to the tax law made Form 5472 such an important tax form that must be filed by every U.S. company that is required to do so.
As an individual, filing Form 5472 is mandatory if you own at least a 25 percent stake in a U.S. company. All foreigners who have a business in the U.S. whether it’s an LLC or even a single-member LLC, Form 5472 must be filed. The purpose of Form 5472 is to report the IRS all the reportable transactions between you and the company.
It’s best to file Form 5472 with a tax professional as it’s one of the most complicated information returns for businesses. If you have enough knowledge about filing Form 5472 and have filed it in the past by yourself, you can start filing it below. This Form 5472 is for those who are going to mail it to the IRS. It allows Form 5472 to be filled out online, then, you can print a paper copy.
As for the electronic filing of Form 5472, you can do it through pretty much any e-file provider. However, you can’t file Form 5472 electronically if you’re a foreign-owned U.S. DE. You must mail Form 5472 upon filing it as electronic filing isn’t an option.
Form 5472 Instructions to File
The Internal Revenue Service published the instructions to file Form 5472. On average, it can take about 5 to 10 hours to file Form 5472 in total. If you have all the information about reportable transactions made between you and the company, filing Form 5472 is easy.
Before you can get to that point though, you must gather all of your documents to file Form 5472 and make plenty of calculations along the way. Since you’re going to use Form 5472 when filing Form 1120—U.S. Corporation Income Tax Return, make sure to file Form 5472 before you get to file 1120.
You can get the line by line instructions by the IRS below.
Changes to Form 5472 with TCJA
The Tax Cuts and Jobs Act of 2017 made it mandatory for all foreign single-member LLC owners to file Form 5472. Previously, only foreigners who own at least a 25 percent share in a company were required to file Form 5472.
The changes are also made to the penalties for late and not filing Form 5472 at all. There is also a penalty for filing Form 5472 incorrectly. With that said, unless you don’t know what you’re doing, it’s best to hire a tax professional to do your 5472.
Form 5472 penalty for failure to file and late-filing
As for the penalty for failure to file Form 5472, it’s between $10,000 to $25,000. This penalty is subject to all foreign owners who fail to file Form 5472 when due.
The deadline to file Form 5472 is April 15 as it works as a return. However, the deadline is July 15 due to the coronavirus pandemic for both filing returns and paying. Given you aren’t going to pay taxes on Form 5472, you must file it by July 15.
You surely can file an extension for future years though. You have the option to extend the April 15 deadline. It’s possible to file an automatic extension of time to file Form 5472 along with some other business returns. Read this article to see how you can get more time to file Form 5472 and avoid possible penalties for late-filing.