NON-U.S. OWNERS OF A U.S. LLC
This is one of the most commonly missed—and most heavily penalized—compliance requirements for foreign individuals who set up U.S. LLCs. Here’s the breakdown.
A domestic single-member LLC, that has not filed an election to be taxed as a C corporation, is a foreign-owned single-member disregarded LLC for U.S. tax purposes.
The single-member LLC must file the Form 5472 with a proforma Form 1120 to report any reportable transactions between the LLC and the sole member.
Our company can help you file these forms, and we can help you assess whether the company is required to file any additional income tax returns and pay U.S. taxes.
Contact us for a FREE consultation below.
Essential
We will prepare and file the Form 5472 & proform Form 1120 for your non-U.S. owned LLC
$700
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Review the company’s financial statements & idenitfy reportable transactions
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Prepare the Form 5472 with proforma Form 1120 and file with the IRS
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A 30 minute consultation with a tax attorney to discuss the choice of entity, federal & state tax considerations, operating formalities, and other matters
Comprehensive
A full review of the LLC’s business activities in the U.S. together with Form 5472 & personal tax filings
$1,700
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Everything in the Essential Plan
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When the LLC is engaged in a U.S. trade or business, the activities of the LLC are subject to U.S. federal income taxes, which require an income tax return for the sole LLC owner
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If the LLC is owned by a nonresident individual, we will prepare the Form 1040-NR federal income tax return
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If the LLC is owned by a foreign corporation, we will prepare the Form 1120-F federal corporate tax return
*Fees for services are billed at the time the service is rendered
Frequently Asked Questions
Why is the Form 5472 required?
On December 12, 2016, the IRS issued final regulations (T.D. 9796) that treat a U.S. disregarded LLC as a reporting corporation for purposes of Section 6038A.
These new regulations require a foreign-owned disregarded LLC to file an annual Form 5472 with a proforma Form 1120, to disclose the owner’s information, and report any “reportable transactions” incurred during the calendar year.
What information is required on the Form 5472?
The Form 5472 reports several pieces of information:
– Name, address, and EIN for the LLC
– Type of business conducted
– Name, address, citizenship, & tax residency of the sole owner
– Disclose the USD value of all reportable transactions between the LLC and sole member
Do I need to be a U.S. citizen or resident to open a U.S. entity?
You don’t have to be a U.S. citizen or resident to open a U.S. company.
Many U.S. entities are formed by nonresidents who do not live in the U.S. and have no personal U.S. tax ID number.
Is the Form 5472 my only filing requirement as a non-U.S. owner?
Maybe. Every foreign-owned disregarded LLC must file the Form 5472, even if no U.S. taxes are owed. Most LLCs owe no U.S. federal income taxes.
However, if the activities of the LLC inside the U.S. are sufficient to give rise to a U.S. trade or business and generate effectively connected income (ECI) with that U.S. business, the sole owner has additional filing requirements and may owe U.S. taxes.
If the LLC owner is a non-U.S. individual, the individual must obtain an ITIN and file a Form 1040-NR.
If the LLC owner is a foreign corporation, the foreign corporation must obtain an EIN and file a Form 1120-F.
What if my LLC has more than one owner?
If you form an LLC with more than one member, it is no longer a disregarded entity for federal tax purposes – it is now classified as a partnership.
Partnerships have different filing obligations from disregarded entities. The LLC no longer needs a Form 5472 filing. Instead, the LLC must file a Form 1065 to report all of the income, expenses, credits, and other tax items. Each LLC member receives a Schedule K-1 which reports their allocation of the profits and losses.
Do you work with international business owners?
Absolutely. We work with individuals and companies around the world that have a U.S. company or U.S. operations. Our services include tax filings, income tax treaty analysis, optimization of earnings repatriation, and withholding tax compliance.
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