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What is form 5472 and who needs to file one?

Form 5472, is ‘Information Return of a 25% Foreign Owned US Corporation or a Foreign Corporation Engaged in a US Trade or Business’.

You need to file a 5472 if you are a non-resident and you own, directly or indirectly 25% or more of a US Corporation.  A 5472 must be filed as an attachment to a reporting corporation’s income tax return by the due date of that return.

A reporting corporation is either:

  1. a 25% foreign-owned US corporation (including a foreign-owned US disregarded entity (DE)), or
  2. a foreign corporation that is engaged in a trade or business in the US.

A corporation is 25% foreign owned if it has at least one direct or indirect 25% foreign shareholder at any time during the tax year.

A reportable transaction is:

  • Any type of transaction listed in Part IV (for example, sales, rents, etc) for which monetary consideration (including US and foreign currency) was the sole consideration paid or received during the reporting corporations tax year; or
  • Any transaction or group of transactions listed in Part IV, if:
    • Any part of the consideration paid or received was not monetary consideration; or
    • Less than full consideration was paid or received.

A foreign person is:

  • An individual who is not a citizen or resident of the United States;
  • An individual who is a citizen or resident of a US possession who is not otherwise a citizen or resident of the United States;
  • Any partnership, association, company, or corporation that is not created or organized in the United States;
  • Any foreign estate or foreign trust;
  • Any foreign government to the extent the foreign government is engaged in conduct of a commercial activity in the United States.

Penalties

A penalty of $25,000 will be assessed on any reporting corporation that fails to file the 5472 in the manner prescribed.