Mastering Form 5472: Filing Requirements for Foreign Individuals, LLCs, and Companies

Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business, is one of the most complicated forms of all U.S. filing requirements concerning foreign persons. Initially, the reporting obligations applied to corporations only; now, the requirements extend to DREs active in the U.S. owned by non-U.S. individuals and corporations.

IRC 6038A, IRC 6038C, and the regulations require a reporting corporation to disclose specified reportable transactions with any "related parties" on Form 5472. Defining these elements is highly sophisticated, so tax advisers must have a thorough grasp of each aspect to ensure that the taxpayer has disclosed all reportable transactions and met the record maintenance requirements to support its tax position for these transactions.

In response to scenarios in which foreign individuals and corporations were conducting business in the U.S. through DREs to avoid information reporting, the Service now requires foreign-owned single-member LLCs and other DREs to file Form 5472.

Through attribution rules, foreign persons owning a U.S. domestic DRE, either directly or indirectly, must obtain necessary taxpayer-identification numbers and disclose reportable transactions. Penalties for failing to file Form 5472 are $25,000 per failure, with complicated rules for penalty mitigation.

Listen as our experienced panel provides a thorough and practical guide to completing Form 5472, including key definitions and discussing the expanded filing requirements.

1. Statutory provisions of IRC 6038A and 6038C
2. Key definitions under statutory provisions and regulations
   1. Reporting corporations
   2. Reportable transactions
   3. Related parties
3. Regulations (TD 9796) requiring foreign-owned DREs to file Form 5472
4. Corporate Transparency Act
5. Completing the form
6. Penalties and penalty abatement provisions

The panel will discuss these and other vital issues:

• What entities and individuals are subject to Form 5472 filing requirements?
• Identifying essential elements of IRC 6038A and 6038C to determine definitions of transactions to report
• Line-by-line guidance on completing Form 5472
• Steps that foreign individuals owning DREs operating in the U.S. must take to fulfill filing requirements
• Penalty abatement and mitigation provisions

Learning Objectives

After completing this course, you will be able to:

• Establish which entities must file Form 5472
• Recognize reportable transactions with related parties that must be reported on Form 5472
• Determine the regulations' impact on DREs and whether a disregarded entity will be treated as a corporation for Form 5472 filing purposes
• Ascertain applicable penalties for failure to file Form 5472 or maintain records
• Identify available exemptions and penalty abatement provisions for failure to file Form 5472 or maintain records
• Recognize the steps that foreign individuals owning DREs operating in the U.S. must take to fulfill filing requirements

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience at mid-level within the organization, preparing complex tax forms and schedules; supervisory authority over other preparers/accountants. Specific knowledge and understanding of information reporting rules for foreign companies and individuals engaged in business activities in the U.S.; familiarity with Form 5472 (Information Return of Foreign Corporation Engaged in U.S. Trade or Business)..

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).