Summary

The penalty for failing to file Form 5472(s) is increasing from $10,000 to $25,000. Form 5472 is a reporting requirement for all U.S. business entities who have owners or shareholders from outside the U.S. who own 25% or more of the company. That $25,000 is a monthly penalty for each qualifying owner/shareholder, so for a company that has two foreign shareholders with 25% stake in the company, that would be $50,000 per month.

Key Facts

The penalty for failing to file Form 5472(s) is increasing from $10,000 to $25,000.
Form 5472 is a reporting requirement for all U.S. business entities who have owners or shareholders from outside the U.S. who own 25% or more of the company.
The $25,000 penalty is a monthly penalty for each qualifying owner/shareholder.
For a company with two foreign shareholders with 25% stake, the penalty would be $50,000 per month.
Businesses partially or fully-owned by one or more foreign owners or shareholders are affected by the penalty increase.

Frequently Asked Questions

Which businesses are affected by the penalty increase?

Businesses that are partially or fully-owned by one or more foreign owners or shareholders.

What is Form 5472?

Form 5472 is a reporting requirement for all U.S. business entities who have owners or shareholders from outside the U.S. who own 25% or more of the company.

How much is the penalty for failing to file Form 5472?

The penalty for failing to file your Form 5472(s) is increasing from $10,000 to $25,000.

How quickly do foreign filing penalties compound?

That $25,000 is a monthly penalty for each qualifying owner/shareholder. For a company that has two foreign shareholders with 25% stake in the company, that would be $50,000 per month.

Related Entities

People: Melissa Hollis
Companies: indinero
Products: Form 5472
Locations: U.S.

April 6, 2018

Foreign Shareholders? It’s 250% More Expensive to File Late

Taxes

Short Story: The penalty for failing to file your Form 5472(s) is increasing from $10,000 to $25,000. (This applies to each filing per month—which can add up fast!)

Q: Which businesses are affected by the penalty increase?

A: Businesses that are partially or fully-owned by one or more foreign owners or shareholders.

Form 5472 is a reporting requirement for all U.S. business entities who have owners or shareholders from outside the U.S. who own 25% or more of the company. These businesses must file a Form 5472 for each foreign owner/shareholder by the business’s tax deadline.

This is a requirement largely in part because those foreign owners or shareholders do not file taxes at all in the U.S. (If yours do, they might qualify as citizens or residents after all, which is worth double checking!)

To file this form, a tax preparer (like indinero!) will need access to residency information and ownership percentages for each applicable shareholder.

Don’t Wait—Foreign Filing Penalties Compound Quickly

As with all foreign filing requirements for U.S. entities, missing the filing deadline can get extremely expensive. That $25,000 is a monthly penalty for each qualifying owner/shareholder. For a company that has two foreign shareholders with 25% stake in the company, that would be $50,000 per month.

For more information on Form 5472 and other foreign filing requirements (including foreign bank accounts and subsidiaries), download The International Entrepreneur’s Guide to Filing U.S. Business Taxes:

And for more resources for filing taxes for your business, download our three-piece tax pack:

Quick Note: This article is provided for informational purposes only, and is not legal, financial, accounting, or tax advice. You should consult appropriate professionals for advice on your specific situation. indinero assumes no liability for actions taken in reliance upon the information contained herein.

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