Dormant Foreign-Owned LLC: Keep or Close, and the Form 5472 Owed

Does a dormant foreign-owned LLC with no transactions file Form 5472?

No. A US LLC whose one owner is a foreign person (not a US citizen or US tax resident; a "foreign-owned U.S. DE" in IRS terms) files a pro forma Form 1120 (only the top filled in, as a cover for Form 5472; no tax is figured) with Form 5472 only for a tax year in which it had a reportable transaction. The Form 5472 instructions say no Form 5472 is required in a year without one. The test is transactions, not income: an LLC with zero income still files for any year in which money moved between it and its owner, or a person related to the owner, such as a family member or a company the owner controls.

For this kind of LLC, reportable transactions go beyond sales and loans. They include money paid or received to form or dissolve the LLC, and contributions to and distributions from it (26 CFR 1.6038A-2(b)(3)(xi)). A "transaction" is any transfer of money or property, however it is made and whether or not it is documented, and includes services done on another's behalf (26 CFR 1.482-1(i)(7)).

A case stops being simple when a year with a transaction was never filed (each one is a separate $25,000 failure), a penalty notice has arrived, the owner is a company with owners above it, the LLC did business in the US, or it elected to be taxed as a corporation.

Gather before deciding:

• The formation date, state and file number, and the IRS letter that assigned the EIN.
• Every payment you made for the LLC, by year: formation, registered agent, state tax or report fees.
• Bank statements from the day the account opened, if one exists.
• The LLC's current status on the state's business search.
• Copies of anything already filed with the IRS, and any IRS letters.

Which "nothing happened" years still count for Form 5472?

Any year in which you paid something for the LLC or moved money in or out. The rules do not list each fee by name, but they reach any transfer of money however made, so a bill the owner pays for the LLC is generally treated as the owner putting money in, or as a loan if the LLC is to repay it (26 CFR 1.482-1(i)(7); Form 5472 instructions).

If you treated your money as a loan to the LLC, a later year with an unpaid balance may still need a filing: Form 5472 reports borrowings still in place at the start of the year (Part IV, line 17, in the Form 5472 instructions). An agent renewal charged automatically to your personal card is easy to miss. It generally makes that year a filing year. For the formation year in detail, see Form 5472 for the year you formed.

Keep it or close it: what does a dormant LLC cost each year?

Keeping the LLC costs the state's annual charge, a registered agent, and, in any year you pay those yourself, a pro forma Form 1120 and Form 5472. Closing costs a one-time state fee plus any state tax owed through the closing date. Each state sets its own amounts. Two examples:

If you have no plan for the LLC, every year it stays open repeats the state charge and the agent's fee, and each one you pay yourself adds a filing year with a $25,000 penalty if missed. Other states' charges are in LLC annual fees by state.

How do I close an LLC from abroad, step by step?

Pay the state, wind up, file the state's closing document, file the final IRS forms, then deactivate the EIN. The order matters because the state will not accept the closing filing while tax is owed, and the IRS will not deactivate an EIN while a return is missing.

1. Check what the state says you owe. Look up the LLC on the state's business search. In Delaware, the cancellation form asks you to contact the Franchise Tax section to confirm the taxes due (form).
2. Pay the state through the closing date. Delaware requires the full annual tax for the calendar year in which the cancellation takes effect, plus any earlier unpaid tax, before it files the certificate (6 Del. C. 18-1107(c)). Wyoming requires the LLC to be active and in good standing (form).
3. Wind up. Pay any last bills, move the remaining money to yourself and close the bank account. Each payment you make for the LLC and each transfer back to you belongs on the final Form 5472.
4. File the state's closing document. Delaware: a certificate of cancellation, filed once the LLC has dissolved and finished winding up (6 Del. C. 18-203). Wyoming: articles of dissolution, mailed with a check or money order and not accepted by email; processing takes up to 15 business days (form). New Mexico: the online portal (Secretary of State).
5. File the final pro forma Form 1120 and Form 5472 for the closing year if it had a reportable transaction, with the final-return box checked (next two sections).
6. Deactivate the EIN. The IRS cannot cancel an EIN but can deactivate it. Send a letter with the LLC's EIN, legal name, address and reason, plus a copy of the EIN assignment notice if you have it, to an address on the IRS page If you no longer need your EIN. The IRS deactivates it only after all required returns are filed and taxes paid (IRS: Closing a business).
7. Keep the records, including proof of every payment and the state's filed copy.

Form 966 is a corporation's dissolution form (IRS: Closing a business); it is not part of closing a single-member LLC that never elected to be taxed as a corporation. No beneficial ownership (BOI) report is needed either: US-formed companies no longer file them (FinCEN; see who still files a BOI report).

Do I need to file Form 5472 if I dissolve the LLC?

Usually yes, for the year you close it. Money paid or received to dissolve the LLC and distributions from it are reportable (26 CFR 1.6038A-2(b)(3)(xi)). Paying the cancellation fee or the final state tax yourself, or receiving the LLC's remaining balance, each makes the closing year a filing year. If the LLC paid every closing cost from its own account and nothing was left to pay out to you, the closing year may have no reportable transaction; check every payment before relying on that.

On the final filing:

• Check Final return in item E of the pro forma Form 1120, and Initial return too if it is the LLC's first filing (Form 1120 instructions).
• Check line 1j of Form 5472 if this is the LLC's first Form 5472 ever.
• Check the Part V box and describe the formation, dissolution, contribution and distribution amounts on an attached statement (Form 5472 instructions).

When it is due. The pro forma return follows the Form 1120 due date, including extensions: for a calendar-year LLC, April 15 of the following year. The LLC uses its owner's US tax year, or the calendar year if the owner has no US filing (Form 5472 instructions). The Form 1120 instructions say a corporation that has dissolved generally files by the 15th day of the 4th month after the date it dissolved. Neither set of instructions says which date governs a foreign-owned LLC's final pro forma return. A return filed by the earlier of the two dates is on time under either reading.

How do I file the pro forma Form 1120 and Form 5472 from abroad?

By fax or mail only; a foreign-owned LLC cannot file Form 5472 electronically. The Form 5472 instructions set out the method:

• Write "Foreign-owned U.S. DE" across the top of Form 1120.
• On Form 1120, complete only the LLC's name and address, item B (its EIN) and item E.
• An owner with no SSN or ITIN does not need one to file. In Part II of Form 5472, enter a reference ID number the LLC assigns you (letters and digits only, the same every year) and your home country's tax number, or "None" if you have none.
• Enter yourself again in Part III as the related party, and answer Part VII: every filer completes both, and a substantially incomplete Form 5472 counts as not filed.
• The LLC needs its own EIN for item B. If it never got one, apply first with Form SS-4, by fax or mail from abroad (Form SS-4 instructions).
• Fax at 300 DPI or higher to 855-887-7737, or mail to: Internal Revenue Service, 1973 Rulon White Blvd, M/S 6112, Attn: PIN Unit, Ogden, UT 84201. Do not use the addresses in the Form 1120 instructions.
• For more time, fax or mail Form 7004 to the same place by the regular due date, with "Foreign-owned U.S. DE" across the top and the Form 1120 code on Part I, line 1.

A form posted through a foreign post office counts as filed when the IRS receives it, not when you post it; the mailed-date rule covers only US mail and IRS-designated private delivery services (26 U.S.C. 7502; 26 CFR 301.7502-1(c)). A fax reaches the IRS the same day; keep the fax confirmation as proof of the date filed.

Does closing the LLC erase the years I never filed?

No. Each year that had a reportable transaction and no Form 5472 stays a separate failure with its own $25,000 penalty (26 U.S.C. 6038A(d)), and dissolving the LLC does not end it. State law matters too: in Delaware, an LLC winding up must pay or set aside money for claims it knows of, or that known facts make likely, before paying out the rest, and an owner who knowingly takes a distribution ahead of them can owe the LLC that amount for 3 years (6 Del. C. 18-804). Which years to file, how far back the IRS can go, how penalties grow after a notice, and how to ask for relief are in missed foreign-owner filings and penalties; rebuilding each year's transactions is in rebuilding books for missed filings.

What if I just let the state dissolve the LLC?

The state ends the LLC on its records, but nothing reaches the IRS. Years that had a reportable transaction still need their Form 5472, and the EIN stays active.

• Delaware cancels the certificate of formation 30 days after the registered agent files its resignation if no new agent is named (6 Del. C. 18-104(d)), or once the annual tax has gone unpaid for 3 years from its due date. Either way, reviving the LLC later means paying the tax, penalties and interest due at cancellation (6 Del. C. 18-1108 and 18-1109).
• Wyoming dissolves an LLC administratively if its annual report is not filed within 60 days after the due date, and does not allow reinstatement after two years in that status (Wyoming FAQ).

A year in which you paid nothing and nothing moved needs no Form 5472, even while the state is still counting the LLC as open. To bring it back instead, see reinstating your company.

Do I owe US tax personally as a non-resident owner?

Only if the owner was engaged in a US trade or business during the year, or had US income whose tax was not fully covered by withholding. That is the filing test for an individual (IRS: Taxation of nonresident aliens) and, on Form 1120-F, for a foreign company that owns the LLC (Form 1120-F instructions). An LLC that only existed on paper usually meets neither.

That changes if the LLC sold to US customers, worked in the US, held US property or received US income: a single-member LLC's activity counts as its owner's for income tax. See when foreign owners owe US tax. Your home country may have its own rules on the LLC and its closing.

Example

These examples are illustrative; the figures are in US dollars.

A Wyoming LLC formed and left alone

• Year 1: In March, the owner pays about US$300 of filing and agent fees from a personal card and treats it as money put in, not a loan the LLC owes back. No bank account is opened. The payment was made to form the LLC, so a pro forma Form 1120 and Form 5472 are due by April 15 of year 2, with Initial return checked on Form 1120 and line 1j on Form 5472.
• Year 2: The agent is not renewed and the owner pays nothing. No Form 5472 is required. The annual report goes unfiled, and Wyoming dissolves the LLC 60 days after the due date. The year-1 filing is still owed if it was missed.
• If instead the owner pays the year-2 annual report and the $60 dissolution fee to close it properly, year 2 has reportable transactions and needs a final filing with the final-return box checked.

A Delaware LLC with three quiet years

• Year 1: The owner pays the formation costs. Years 2 and 3: each June, the owner pays the Delaware annual tax personally. Nothing is filed with the IRS. Each of the three years had a reportable transaction. Years 1 and 2 are already late, and year 3's filing is due April 15 of year 4.
• Year 4: To cancel, the owner pays the tax for year 3, the full tax for year 4 and the $220 cancellation fee. Year 4 is a fourth filing year, the final one.
• Closing in year 4 leaves four filings. Any not filed by its due date carries its own $25,000 penalty, and closing does not settle the late ones.

Money in, money out

• Year 1: The owner deposits US$2,000 in the LLC's bank account and spends nothing. The deposit is a contribution: year 1 is a filing year.
• Year 2: The LLC pays the state's closing fee from its own account, then the owner withdraws the remaining balance and closes the account. The fee paid to the state is not a related-party transaction; the withdrawal is a distribution, so year 2 needs a final filing.
• If the deposit and withdrawal had fallen in the same year, one filing would cover both.

Different for you?

• One or more years were never filed, or a penalty notice arrived: see missed foreign-owner filings and penalties and get corporate tax help before closing.
• You cannot tell what moved in past years: see rebuilding books for missed filings and get catch-up bookkeeping.
• The LLC is operating, not closing: see foreign-owned single-member LLC filing.
• You own a Delaware C corporation, not an LLC: see closing a US corporation from abroad.
• The LLC elected to be taxed as a corporation: it files a real Form 1120; see foreign-owned LLC taxed as a corporation.
• The LLC has two or more owners: see closed foreign-owned partnership LLC that never filed.
• You are a US citizen, green-card holder or other US tax resident, wherever you live: the LLC is not foreign-owned and files no Form 5472; see unused LLC: keep or close.
• You live in Canada: Canada has its own filings for a US LLC; see Canadian owner of a US LLC, missed T1134 for a US company and get cross-border tax help.
• The state already dissolved it and you want it back: see reinstating your company.
• The LLC did business or earned income in the US: see when foreign owners owe US tax and get corporate tax help.