IRS form guides

Form 5472 is an IRS information return that reports transactions between a U.S. company and its foreign owner or other related parties. Every U.S. single-member LLC owned by a foreign person, and every U.S. corporation that is at least 25% foreign-owned, must file it for each year with reportable transactions — even with no income. A foreign-owned single-member LLC attaches it to a pro forma Form 1120, due April 15 for calendar-year companies. The penalty for not filing starts at $25,000.

Form 7004 gives most business returns — including Form 1120, Form 1065, Form 1120-S and the pro forma 1120 with Form 5472 — an automatic extension of time to file, generally six months. It must be filed by the return’s original due date, and no reason is required. It extends only the time to file, not the time to pay: any tax owed is still due on the original date.

Form SS-4 is the application for an Employer Identification Number (EIN), the federal tax ID a U.S. LLC or corporation needs to open a bank account, hire, and file returns such as Form 5472. Owners without an SSN or ITIN cannot use the IRS online EIN tool, but they can still get an EIN by sending Form SS-4 to the IRS by fax or mail; international applicants can also apply by phone. The IRS does not charge for an EIN.

Form W-8BEN is a certificate a non-U.S. individual gives to a U.S. payer — a client, bank, broker or platform — to confirm they are a foreign person and, where a tax treaty applies, claim a reduced withholding rate. It is not sent to the IRS. Without it, a payer may withhold 30% on U.S.-source income such as dividends, interest or royalties. It generally stays valid until the end of the third calendar year after it is signed.

Form W-8BEN-E is the version of W-8BEN for foreign entities. A non-U.S. company gives it to a U.S. payer to certify that it is foreign, state its entity type and FATCA status, and claim any reduced treaty withholding rate. It is not sent to the IRS. Without a valid W-8BEN-E, the payer may withhold 30% on certain U.S.-source payments. Like W-8BEN, it generally stays valid until the end of the third calendar year after signing.

Form W-8ECI is used by a foreign person or entity to certify to a U.S. payer that the income it receives is effectively connected with the conduct of a trade or business in the United States. That income is not subject to the flat 30% withholding, but it must be reported on a U.S. income tax return and is taxed at regular rates. The form requires a U.S. taxpayer identification number and is given to the payer, not the IRS.

Form 8832 lets an eligible entity — most LLCs and many foreign entities — choose how it is classified for U.S. federal tax: as a corporation, a partnership, or a disregarded entity. Without it, default rules apply: a single-member LLC is disregarded and a multi-member LLC is a partnership. The election can take effect up to 75 days before or 12 months after filing, and after changing classification you generally cannot change again for 60 months.

Form 2553 is how a corporation — or an LLC electing corporate treatment — chooses S corporation status, so income and losses pass through to shareholders. It must be filed no later than 2 months and 15 days after the start of the tax year it should apply to (March 15 for calendar-year companies), or at any time in the preceding year. Every shareholder must consent. Nonresident aliens cannot be S corporation shareholders, so a company with a foreign individual owner does not qualify.

If a foreign-owned U.S. LLC or a 25% foreign-owned corporation doesn’t file Form 5472 on time, files it substantially incomplete, or doesn’t keep the required records, the IRS can charge $25,000 per form, per year. If the failure continues more than 90 days after an IRS notice, another $25,000 applies for every 30 days, with no maximum. It applies even when the company owes no tax. Filing late beats not filing, and relief is possible with reasonable cause.

A reportable transaction on Form 5472 is any transfer of money, property or services between the U.S. company and a related party — usually its foreign owner. For a foreign-owned single-member LLC that includes the owner putting money in, the LLC paying money out to the owner, loans either way, the owner paying the LLC’s formation or state fees, and sales, rents, royalties or services between them. A single such transaction in the year is enough to require Form 5472.

Use Form W-8BEN if you are a non-U.S. individual and Form W-8BEN-E if you are a non-U.S. entity, such as a foreign company. Both certify foreign status to a U.S. payer and can claim tax-treaty benefits, and neither is sent to the IRS. W-8BEN is one page; W-8BEN-E is longer because it also covers the entity’s FATCA status. U.S. persons use Form W-9 instead, and income connected with a U.S. business calls for W-8ECI.

Form 8832 lets an LLC or other eligible entity choose to be taxed as a corporation, a partnership or a disregarded entity. Form 2553 lets a corporation, or an LLC, elect S corporation status so income passes through to its owners. An LLC that wants S status files only Form 2553. Nonresident aliens and foreign companies can’t be S corporation shareholders, so for a foreign-owned company the choice is the default treatment or a Form 8832 election to be taxed as a C corporation.