QUESTION: How to File IRS Forms 5472 and 1120 for a Foreign-Owned Single-Member LLC in Wyoming?
I am a non-US resident who formed a single-member LLC in Wyoming on May 29, 2023. I have not generated any income from my business yet, but I learned that I need to file IRS Forms 5472 and Proforma 1120 every year. I am not sure how to complete these forms, especially the part about reporting transactions between my LLC and myself or any related parties. Can you explain the requirements and the process for filing out these forms, and how much would you charge for your service?
EXPERT’S RESPONSE: As a non-US resident who owns a single-member LLC in Wyoming, you have to file IRS Forms 5472 and 1120 every year – if you have a reportable or related party transaction, even if you have no income or expenses from your business. These forms are required to report reportable or related party transactions and to comply with the US tax laws and regulations. If you fail to file these forms, you may face a penalty of up to $25,000 per year.
In this article, I will explain the requirements and the process for filing these forms, and how much we charge for our service. I will also provide some tips and resources to help you understand the complex tax concepts and rules that apply to your situation.
What are IRS Forms 5472 and Proforma 1120?
IRS Form 5472 is an information return that provides information about the transactions between a foreign-owned US Single Member LLC, corporation or a foreign corporation engaged in a US trade or business and its related parties. A related party is any person or entity that owns directly or indirectly at least 25% of the corporation or any person or entity that has control or influence over the corporation or vice versa.
While a foreign-owned U.S. DE has no income tax return filing requirement, it is now required to file a pro forma Form 1120 with Form 5472 attached by the due date (including extensions) of that Form 1120. The only information required to be completed on Form 1120 is the name and address of the foreign-owned U.S. DE and items B and E on the first page.
Why do you need to file IRS Forms 5472 and Proforma 1120?
As a non-US resident who owns a single-member LLC in Wyoming, you are considered a foreign person for US tax purposes. Your LLC is also considered a foreign-owned US disregarded entity (DE), which means that it is treated as a branch or division of its owner and not as a separate legal entity.
However, under the IRS regulations, a foreign-owned US DE is treated as a US corporation for the purpose of filing Form 5472 and Proforma Form 1120. This means that you have to file these forms every year there is a related party or reportable transaction, regardless of whether your LLC has any income or expenses or whether it has any physical presence or activity in the US.
The reason for this requirement is to prevent tax evasion and abuse by foreign persons who use US entities to hide their income or assets from the IRS or their home country’s tax authorities. By filing these forms, you are providing the IRS with information about your LLC’s transactions and activities between related parties and allowing the IRS to verify your compliance with US tax laws and regulations.
How to file IRS Forms 5472 and Proforma 1120?
The process of filing these forms is not very complicated, but it does require some attention and accuracy. The link below contains a comprehensive guide to completing the forms.
How to File Forms 5472 and 1120 for a Foreign-Owned Single Member LLC
Key Information for Filing
1. Obtain Forms and Instructions:
- Download Form 5472 here: https://www.irs.gov/forms-pubs/about-form-5472
- Download Form 1120 here: https://www.irs.gov/forms-pubs/about-form-1120
- Carefully review the instructions for both forms.
2. Complete Part V of Form 5472:
- Describe any “other transactions” as defined by Regulations section 1.482-1(i)(7), such as:
- Amounts paid or received in connection with the formation, dissolution, acquisition, and disposition of the entity.
- Contributions to and distributions from the entity.
3. Review Helpful Resources:
- Access video explanations of reportable transactions: (links to videos)
- Read a comprehensive article on filing Forms 5472 and 1120 for single-member LLCs: https://oandgaccounting.com/foreign-owned-us-llc/how-to-file-forms-5472-and-1120-for-a-foreign-owned-single-member-llc/
How much do we charge for our service?
If you need help with filing Form 5472 and Form 1120 for your LLC, we offer a professional and affordable service that can save you time and hassle. We have a team of qualified and experienced CPAs who specialize in international tax and accounting. We can prepare and file these forms for you, as well as advise you on the best tax strategies and solutions for your situation.
Our fees for filing Form 5472 and Form 1120 for a foreign-owned single-member LLC in Wyoming can be found in the link below
Foreign Owned U.S Single Member LLC (U.S Disregarded Entity)
Consider Professional Assistance:
- Ensure accurate and timely filing with expert guidance from a CPA.
- Explore CPA assistance services and fees here: https://oandgaccounting.com/single-member/
- Book a consultation with an international tax expert: https://oandgaccounting.com/appointment-booking-form/
