If you own a US LLC from outside the United States, the IRS describes your obligations in a vocabulary nobody outside the profession uses. This glossary defines every term that matters, in plain English, in one place. Each definition is self-contained, so you can jump straight to the term you were sent here for. Deeper guides are linked where we have them.

Written by Ifetoluwase Samuel Pirisola, Managing Director of Caldwell Tax Services, LLC — July 2026. General information, not tax advice for your specific situation.

Core filing terms

What is Form 5472?

Form 5472 is an IRS information return that reports transactions between a US company and its foreign owner or other foreign related parties. Since tax year 2017, it is required not only of 25%-or-more foreign-owned US corporations but also of every foreign-owned single-member LLC treated as a disregarded entity. It reports money movement, not profit — an LLC with zero income can still owe a filing. The penalty for skipping it is $25,000 per form, per year (IRS: About Form 5472).

What is a pro-forma Form 1120?

A pro-forma Form 1120 is a mostly blank US corporate tax return used as a cover page for Form 5472 when the filer is a foreign-owned disregarded-entity LLC. Only the name, address, and items B and E on page 1 are completed, and "Foreign-owned U.S. DE" is written across the top. It exists because Form 5472 cannot be filed on its own — the IRS processing systems need a return to attach it to (IRS Form 5472 instructions).

What is a disregarded entity?

A disregarded entity is a business that the IRS ignores as separate from its owner for income-tax purposes — the default classification for a single-member LLC that has not elected corporate treatment. "Disregarded" does not mean invisible: a foreign-owned disregarded LLC is still treated as a corporation solely for Form 5472 reporting purposes, which is exactly why the annual 5472 + pro-forma 1120 filing exists.

What is a reportable transaction (for Form 5472)?

A reportable transaction is any exchange of money or property between the LLC and its foreign owner or a foreign related party — capital contributions, distributions, loans, loan repayments, payments for services, rent, and even amounts the owner paid on the LLC's behalf, such as formation costs or the registered-agent fee. Because forming and funding an LLC is itself reportable, almost every foreign-owned LLC has reportable transactions in its first year.

Who counts as a foreign owner (25% foreign shareholder)?

A foreign owner, for Form 5472 purposes, is a foreign person — an individual who is not a US citizen or resident, or a foreign company, partnership, trust, or estate — that owns, directly or indirectly, 25% or more of a US corporation by vote or value. For a single-member LLC, one non-US owner means 100% foreign ownership, so the test is automatically met.

What is a related party?

A related party is the foreign owner plus anyone connected to the owner or the company under IRS attribution rules — family members, other companies the owner controls, and entities under common ownership. Transactions with related parties, not just the owner personally, belong on Form 5472.

What is Form 7004?

Form 7004 is the IRS application for an automatic six-month extension of time to file certain business returns, including the pro-forma 1120 + Form 5472 package. Filed by April 15, it moves a calendar-year LLC's deadline to October 15. It extends the time to file, not the time to pay any tax owed (IRS: About Form 7004).

What is Form 5471 (and how is it different from 5472)?

Form 5471 is the mirror image of Form 5472: it is filed by US persons who own foreign corporations, while Form 5472 is filed for US companies owned by foreign persons. If you are a non-US resident who owns a US LLC, Form 5472 is your form; 5471 is not.

Banking and reporting terms

What is FinCEN Form 114 (FBAR)?

FinCEN Form 114, commonly called the FBAR (Foreign Bank Account Report), is an annual report of non-US financial accounts filed with the Financial Crimes Enforcement Network — not the IRS. It is required when a US person's foreign accounts exceed $10,000 in combined value at any point in the calendar year. It is filed electronically through the BSA E-Filing System, due April 15 with an automatic extension to October 15 (FinCEN: Report of Foreign Bank and Financial Accounts).

Who is a "US person" for FBAR purposes?

A US person includes US citizens, US tax residents, and — the part foreign LLC owners miss — any entity formed under US law, including an LLC. Your US LLC is a US person even though you are not. If the LLC holds a foreign bank account and the $10,000 threshold is crossed, the LLC has an FBAR obligation regardless of where its owner lives.

What are FBAR penalties (willful vs. non-willful)?

A non-willful FBAR violation — an honest miss — carries a civil penalty of up to $16,536 per unfiled report (inflation-adjusted for penalties assessed after January 17, 2025). A willful violation carries the greater of $165,353 or 50% of the account balance, per year. After the Supreme Court's Bittner v. United States (2023) decision, non-willful penalties apply per report, not per account (IRS: FBAR penalties).

What is FATCA / Form 8938?

FATCA (the Foreign Account Tax Compliance Act) requires certain taxpayers to report foreign financial assets on Form 8938, filed with an income tax return. It overlaps with, but does not replace, the FBAR — thresholds, filers, and receiving agencies differ. Most non-resident owners of US LLCs deal with FBAR, not Form 8938, but the two are commonly confused.

What is a BOI report (beneficial ownership information)?

A BOI report discloses a company's real human owners to FinCEN under the Corporate Transparency Act. As of FinCEN's March 26, 2025 interim final rule, US-formed companies — including foreign-owned US LLCs — are exempt. Only entities formed under foreign law that registered to do business in a US state still file (FinCEN: BOI). If your LLC was formed in a US state, you currently have no BOI obligation — but you still have Form 5472.

Identification numbers

What is an EIN?

An EIN (Employer Identification Number) is the nine-digit federal tax ID of a business. Every foreign-owned US LLC needs one — to file Form 5472, open a bank account, and deal with the IRS. A foreign owner without a US Social Security number can still get an EIN by filing Form SS-4 by fax or phone (IRS: How to apply for an EIN).

What is an ITIN?

An ITIN (Individual Taxpayer Identification Number) is a nine-digit tax ID for individuals who need to file US taxes but are not eligible for a Social Security number. A non-resident LLC owner needs an ITIN only when they personally must file — typically a Form 1040-NR — or claim treaty benefits. You do not need an ITIN just to file Form 5472; the form accepts your foreign tax ID (IRS: ITINs).

What is Form W-7?

Form W-7 is the application for an ITIN, filed with proof of identity and foreign status (usually a passport) and, in most cases, attached to the tax return that creates the need for the number. Standard IRS processing runs roughly 7–11 weeks, longer in filing season.

What is a Certifying Acceptance Agent (CAA)?

A Certifying Acceptance Agent is a person or firm authorized by the IRS to verify ITIN applicants' identity documents so the applicant does not have to mail their original passport to the IRS. For applicants outside the US, using a CAA is usually the difference between a smooth application and months without a passport (IRS: Acceptance Agent Program).

Income tax terms

What is effectively connected income (ECI)?

Effectively connected income is income connected with the conduct of a trade or business within the United States. ECI is what makes a non-resident owner personally liable for US income tax and a Form 1040-NR filing. A foreign-owned LLC can have substantial revenue and still generate no ECI — for example, selling services performed entirely outside the US — but that conclusion deserves professional analysis, not assumption (IRS: Effectively connected income).

What is Form 1040-NR?

Form 1040-NR is the US income tax return for non-resident alien individuals. A non-resident owner of a US LLC files it when the LLC's activity produces effectively connected income or other US-source taxable income. No ECI usually means no 1040-NR — but the Form 5472 information filing is still due.

What is the substantial presence test?

The substantial presence test determines whether a foreign individual has spent enough days in the US to become a US tax resident: 31+ days in the current year and 183+ days under a weighted three-year count. Crossing it changes everything — a US tax resident reports worldwide income and files Form 1040, not 1040-NR (IRS: Substantial presence test).

What is a tax treaty?

A tax treaty is an agreement between the US and another country that can reduce or eliminate US tax on certain income for that country's residents. Treaty benefits are typically claimed on Form W-8BEN or a 1040-NR with Form 8833 — they are not automatic, and they never waive information filings like Form 5472.

What are Forms W-8BEN and W-9?

Form W-8BEN certifies to a payer (a client, marketplace, or bank) that you are a foreign person, so they can apply the correct withholding. Form W-9 is its domestic counterpart for US persons. Foreign LLC owners are routinely asked for the wrong one — which form applies depends on the LLC's classification and who the "beneficial owner" of the income is.

Penalty and cleanup terms

What is reasonable-cause abatement?

Reasonable-cause abatement is the IRS process for removing a penalty when the failure happened despite ordinary business care — commonly, a foreign owner who had no way to know a zero-income LLC still had a filing duty. It is requested in writing, with facts and documentation, and is the primary tool for contesting the $25,000 Form 5472 penalty (IRS: Penalty relief for reasonable cause).

What are delinquent submission procedures?

Delinquent submission procedures are IRS- and FinCEN-sanctioned paths for filing late information returns and FBARs before the government contacts you — typically with a reasonable-cause statement attached. Coming forward voluntarily is treated dramatically better than waiting for a notice.

What is an IRS notice CP215?

CP215 is the notice the IRS sends when it assesses a civil penalty against a business — for foreign-owned LLCs, it is most often the $25,000 Form 5472 penalty arriving by mail in Ogden's wake. It states the penalty and the deadline to respond; the response window is where abatement happens.

State-level terms

What is a registered agent?

A registered agent is the person or company designated to receive legal and state correspondence for your LLC in its state of formation. The fee you pay them is, incidentally, a reportable transaction on Form 5472 if you paid it personally on the LLC's behalf.

What is an annual report / franchise tax?

An annual report (in some states, a franchise tax) is the state-level filing that keeps an LLC in good standing — separate from, and in addition to, every federal obligation on this page. New Mexico, notably, requires no annual report for LLCs, which is one reason non-residents choose it.

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