Frequently Asked Questions


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What happens if I do not file my annual tax return for my Foreign-Owned Sole Member LLC?

If a sole proprietorship LLC is owned at least 25% by foreign persons and doesn’t file Form 5472, the penalties  are $25,000.

The penalty also applies for failure to maintain records as required by Regulations section 1.6038A-3.

If the failure continues for more than 90 days after notification by the IRS, an additional penalty of $25,000 will apply. This penalty applies with respect to each related party for which a failure occurs for each 30-day period (or part of a 30-day period) during which the failure continues after the 90-day period ends.

Criminal penalties under sections 72037206, and 7207 may also apply for failure to submit information or for filing false or fraudulent information.