It isn't surprising to know that many American businesses don't only focus on their local area. Rather, they focus on the world, with plenty of shareholders and even owners living outside the US.

Why Your Foreign Company Needs to File the IRS Form 5472

Of course, this means that the opportunities that are presented towards the business are far and massive, but this also comes with a problem: tax. The tax situation of any international involvement can be quite mind-boggling, and an expert is typically required to help file everything.

That being said, one of the forms that your business clients that have full or partial ownership with your business are the IRS Form 5472. Here’s everything you need to know about it:

What Is It in the First Place?

The IRS Form 5472 is essentially a report form where your business is obligated to report all of their details regarding important shareholders and owners who are not from the US. This includes all of the ownership, the management, and the operations, and it applies to those who have at least 10% or more voting power in the company.

Why Do You Have to File This Form?

The number one reason the IRS Form 5472 is required is that power is given to foreign owners. If they can control a significant part of the business, they are considered owners, making you a foreign corporation, which means that you must report this to the IRS.

Failure to do so could mean that you get a penalty or several tax liens. For that reason, you need to file this.

What Should You Report on the IRS Form 5472?

This IRS form is not easy to fill out, and you have to pay attention to detail since it can land you in hot water if you don’t inform the IRS of everything that you need to. This can include information regarding the income that you earn from foreign operations and the foreign operations themselves. If you are not American, there are several other necessities as well, such as taxes that must be paid and even specific requirements.

All of this is reported on this form, so you definitely need to be careful with what you write.

Are There Any Penalties for Failing to File This Form?

If the IRS Form 5472 is not filed when it is due, the penalties could be massive, going as far as $10,000. This is a stiff enough penalty, so you definitely want to file this on time.


The IRS Form 5472 is an important document that every business with foreign investors must file. It is essentially a report of all of the vital information regarding the business and everything that has to do with its operation and its shareholders and owners. This is important to keep in mind, especially if you have a company with foreign ownership, since it could have big consequences. 

In addition, you have to file it on time. Otherwise, you could get a penalty, which would be hard to deal with. If you need help filing it, feel free to reach out to professionals such as an accountant to assist you. They can ensure your IRS Form 5472 is properly filed and that your business is well away from any penalties!

Doola offers global entrepreneurs the help needed to form a company in the US. If you need help with US taxes, reach out to us today!

doola's website is for general information purposes only and doesn't provide official law or tax advice. For tax or legal advice we are happy to connect you to a professional in our network! Please see our terms and privacy policy. Thank you and please don't hesitate to reach out with any questions.

Start your dream business and keep it 100% compliant

Turn your dream idea into your dream business.