A Guide to Form 5472 for Foreign Owned Companies

As a business working internationally, it’s important to stay on top of the many different laws and regulations that apply to your business. Because there are constant changes being made to the regulations surrounding foreign owned companies, you should make sure that you understand the latest updates surrounding Form 5472.

Who Needs to File Form 5472?

Foreign owned companies generally need to file Form 5472, as it should be filed by any business with foreign shareholders who own 25% or more of the company or who have foreign ownership. It is a form that lets the IRS get a picture of the global transactions between domestic and foreign parties. The form first became a requirement in 2017, and it needs to be filed by foreign owned companies and not the individual who owns it or the shareholders themselves.

What Happens If You Don’t File Form 5472?

The penalties for not filing were increased in 2017 when the form became a requirement, and the fines can range from $10,000 to $25,000 depending on your business. If you file an incomplete form or don’t file at all, you are eligible for potential punishment.

What Should Be Reported on Form 5472?

Foreign owned companies must include all reportable transactions on their Form 5472. Reportable transactions include:

• Transactions listed in Part IV (sales, rent, etc.) where money was the sole consideration paid or received
• Transactions or groups of transactions listed in Part IV where part of the consideration was not money or less than full consideration was paid or received

In short, if you received money from, paid money to or paid on behalf of eligible foreign owned companies, you need to work with your tax professional to file a Form 5472.

How Can I File My Form?

When you work with MKS&H, it’s easy to file your international taxes. We will need your Employer Identification Number (EIN) and can complete and fax your form for you based on your information. This form is unique in that it must be filed on paper or by fax and cannot be submitted electronically.

Prepare Your Foreign Source Income Taxes with Help from MKS&H

MKS&H provides tax and accounting services to businesses of every size and in every industry. We can work with you to explore the many tax benefits of investment properties and assess your real estate portfolio. Contact us today for a consultation.

About MKS&H: McLean, Koehler, Sparks & Hammond (MKS&H) is a professional service firm with offices in Hunt Valley and Frederick. MKS&H helps owners and organizational leaders become more successful by putting complex financial data into truly meaningful context. But deeper than dollars and data, our focus is on developing an understanding of you, your culture and your business goals. This approach enables our clients to achieve their greatest potential.

Like what you read? Sign-up for our C-Suite Spotlight Program.