Does a Company Outside the US File a US Tax Return?

Is your corporation Canadian?

A Canadian corporation needs to consider filings in both countries and the Canada-US treaty. See Canadian corporation US tax returns for that analysis.

Does selling to US customers alone require Form 1120-F?

Selling to US buyers alone does not answer whether a foreign corporation must file Form 1120-F. The key questions are whether it conducts a US trade or business, has US-source income whose tax was not fully withheld, or has another filing trigger listed in the Form 1120-F instructions.

Look beyond the customer's address. Check where the company's owner, directors, employees, and other representatives work for it, who negotiates or signs its US contracts, and where its inventory is held and sold. An owner's work for the company while physically in the US can matter even without US payroll. The IRS says the US trade or business question depends on the specific facts (IRS filing responsibilities). US inventory sales can produce effectively connected income, but the income-source rules differ for purchased and produced goods (IRS: effectively connected income). See when foreign owners owe US tax for the activity test.

If the corporation has no US trade or business and its full US tax was withheld at source, the Form 1120-F instructions generally provide a filing exception. A refund claim or US-source income without enough withholding can still require a return.

Must a company with a US trade or business file even when no tax is due?

Generally, yes. A foreign corporation engaged in a US trade or business must file Form 1120-F whether or not that business produced US-source income and whether or not a treaty exempts the income (IRS: Form 1120-F instructions). A loss or zero tax is not, by itself, a filing exception.

Form 1120-F reports the foreign corporation's US income and tax position. A separate US subsidiary does not turn its parent into a US corporation; each entity's activities and income must be tested separately (IRS: foreign corporation filing responsibilities). If the foreign corporation has reportable related-party transactions while engaged in a US trade or business, Form 5472 may also apply. A foreign corporation with no US permanent establishment under an applicable treaty is exempt from Form 5472 if it timely files Form 8833; a foreign-owned US disregarded LLC tests its own filing duty separately (IRS: Form 5472 instructions).

Does a treaty remove the return when there is no US permanent establishment?

Under an applicable treaty, a permanent establishment is a defined level of US business presence. Depending on the treaty, it can include a fixed place used for the business or a person in the US who regularly makes binding contracts for it. No US office alone does not settle the test (IRS treaty explanation). Qualifying business profits may be exempt from federal tax without a US permanent establishment, but the IRS instructions still require a return when the corporation has a US trade or business. If treaty disclosure is required, attach Form 8833 to the return; failure can cost the corporation $10,000 per undisclosed position (IRC section 6712).

Treaty relief depends on the particular treaty, the company's treaty residence, its eligibility for benefits, and whether the income is attributable to a US permanent establishment. If both countries treat the company as resident, apply that treaty's company-residence rule; some require competent-authority agreement for benefits (IRS: Form 8802 instructions). If there is no applicable treaty, there is no treaty permanent-establishment protection; apply the domestic US trade or business and income rules instead. The absence of a US office alone does not settle either test (IRS: foreign corporation filing responsibilities; Form 1120-F instructions).

When should a foreign company file a protective Form 1120-F?

A foreign corporation should consider a protective Form 1120-F when it has limited US activity but reasonably concludes that it has no effectively connected income, or claims treaty protection because it has no US permanent establishment. The filing preserves a possible right to deductions and credits if the IRS later disagrees (IRS: Form 1120-F instructions).

A protective return is a filed return, not a letter kept in company records. The IRS instructs the company to use its own name and EIN, check the protective-return box at the top of page 1, complete the required questions, and attach Form 8833 when the protective filing relies on treaty exemption. An authorized officer signs the return (IRS: protective return instructions). Report known taxable effectively connected income on Form 1120-F; a corporation claiming treaty exemption because it has no US permanent establishment can follow the protective-return instructions even if it has a US trade or business.

Does a US LLC change who files?

Yes. A US LLC's federal tax classification determines whether its income belongs on the foreign corporation's Form 1120-F or on a separate US entity return. Ownership alone does not establish the parent's Form 1120-F duty (IRS: LLC classifications; IRS: foreign corporation filing responsibilities).

To elect corporate status, the LLC files Form 8832, signed by each owner or an authorized officer, manager, or member. A former owner during a retroactive period must also sign. Its effective date generally can be no more than 75 days before filing or 12 months after filing (IRS: Form 8832).

For the LLC's own reporting, see foreign-owned single-member LLC filings or foreign-owned US corporation filings.

When does the foreign corporation need its own EIN?

The foreign corporation must apply for its own EIN for Form 1120-F; the US LLC's EIN does not identify its owner. If the EIN has not arrived by the filing deadline, the IRS permits “Applied For” and the application date on a paper Form 1120-F. E-filing and Form W-8ECI require the corporation's US tax ID (IRS: Form 1120-F instructions; IRS: Form W-8ECI instructions).

A foreign-owned disregarded US LLC can need its own EIN to file Form 5472 even though it has no separate income-tax return (IRS: Form SS-4 instructions). Apply under each entity's legal name and keep both EIN notices. An EIN does not, by itself, prove that either entity owes income tax.

Which Form W-8 should the company give a US payer?

When a payer or withholding agent needs to document the company's foreign status for a payment, the form depends on the income. Form W-8BEN-E generally documents foreign status or an eligible treaty withholding claim for income that is not effectively connected with a US trade or business. Form W-8ECI covers US-source effectively connected income and requires the corporation's US tax ID. Selling goods to a US customer alone does not mean that customer needs either form (IRS: W-8BEN-E instructions; IRS: W-8ECI instructions).

For income allocated by a US partnership, a foreign corporate partner generally gives Form W-8BEN-E. It may instead give Form W-8ECI if it makes a section 882(d) US real-property-income election, or if it is separately engaged in a US trade or business and wants its partnership share subject to section 1446 withholding (IRS: W-8ECI instructions). The partner, not the partnership, makes the real-property election by attaching a statement to its first-year Form 1120-F, signed by an authorized officer, and a copy or intent statement to Form W-8ECI. The initial election can generally be made until the later of 3 years after filing the return or 2 years after paying the tax (eCFR; US Code).

For a disregarded LLC, the foreign corporate owner generally supplies its own W-8 documentation; the LLC's separate EIN for Form 5472 does not replace the owner's identity on Form W-8ECI (IRS: W-8BEN-E instructions; IRS: W-8ECI instructions). Give the form to the payer, not to the IRS. Form W-8ECI is not the form for a treaty reduction on income that is not effectively connected (IRS: W-8ECI instructions).

When can a US branch owe branch profits tax?

A foreign corporation with a US trade or business can face branch profits tax in addition to regular corporate income tax. The statutory tax is 30% on a calculated dividend-equivalent amount based on after-tax US effectively connected earnings and profits and changes in US net equity, rather than simply on cash sent abroad (IRS: Form 1120-F instructions).

Reinvestment in the US business can affect the calculation; a later reduction in US net equity can bring prior earnings into it. A treaty may reduce the tax if the corporation meets the treaty's requirements, including any limitation-on-benefits rule (IRS: Form 1120-F instructions). This needs separate review when the foreign company operates directly in the US or through a disregarded LLC.

Can a state require a return despite federal treaty relief?

Yes. Federal treaty relief does not decide every state filing obligation. New York, for example, says a foreign corporation subject to New York tax must file and pay state and local taxes even if it has not obtained authority to do business there (New York State Tax Department). An Article 9-A corporation generally files Form CT-3; certain alien corporations also report federally treaty-exempt income on Form CT-225 unless the treaty bars state taxation (New York: Form CT-3 instructions; Form CT-225 instructions).

Check each state where the corporation has employees, inventory, property, or other activity. State income or franchise tax rules and sales tax rules are separate questions; do not infer a state result from the federal Form 1120-F position.

When is Form 1120-F due, and what can a late return cost?

A foreign corporation with a US office generally files Form 1120-F by the 15th day of the fourth month after its tax year ends; without a US office, by the 15th day of the sixth month (IRS: Form 1120-F instructions). For a US office and June 30 year-end, the third-month deadline applies only to tax years beginning before 2026; later years use the fourth-month rule (IRS: Form 1120 series deadlines). Generally, file Form 7004 by the original due date for a six-month filing extension. A foreign corporation with a US office may instead qualify for an automatic extension to the 15th day of the sixth month to file and pay without Form 7004; it must attach a qualifying statement to its return. If it needs more time to file, it files Form 7004 with line 4 checked by the sixth-month date for another four months (IRS: Form 7004 instructions).

The IRS instructions generally treat a Form 1120-F as timely for deductions and credits related to effectively connected income if filed within 18 months after the return's due date. An exception can apply when the preceding year's return was not filed; limited relief can depend on reasonable conduct and good faith. A missed return can therefore change tax on gross income, not merely create a late-filing penalty. Review each prior year before assuming the current return cures it.

When tax remains unpaid, filing late can cost 5% of that tax per month or part-month, up to 25%; late payment can separately cost 0.5% per month, up to 25%. For a calendar-year return due in 2027 and filed more than 60 days late, the filing penalty is at least the smaller of $535 or the tax due. The filing penalty is reduced for months when both apply; reasonable cause can remove either penalty (IRC section 6651; IRS: Revenue Procedure 2025-32). A missed Form 5472 can cost the corporation $25,000, plus $25,000 for each 30-day period after 90 days from IRS notice if the failure continues (IRS: Form 5472 instructions).

An owner or officer does not personally owe the corporation's Form 1120-F tax solely by title. But someone responsible for withheld payroll tax who willfully fails to pay it can owe the full unpaid trust fund amount under IRC section 6672. The IRS generally has three years from the payroll return's filing date to assess the penalty; a return filed before the following April 15 is deemed filed that day. No filed return means no assessment time limit. After assessment, collection generally has a ten-year limit. Extensions and suspensions can change these periods (IRC sections 6501, 6502, and 6672).

Gather incorporation and treaty-residence records, US contracts, details of workers and inventory, the LLC's classification election if any, payer withholding forms, both entities' EIN notices, and prior federal and state returns. These facts decide which returns are due and whether a protective filing is appropriate.

Example

Illustrative amounts in US dollars; no tax is calculated. A foreign corporation owns a US single-member LLC that has not elected corporate status. It contributes US$80,000 to the LLC, which makes US$300,000 of sales and holds inventory in a US warehouse.

The US$80,000 owner contribution is a reportable related-party transaction: the LLC describes it on a sheet attached to Form 5472, checks Part V, and files it with a pro forma Form 1120 (IRS: Form 5472 instructions). The US$300,000 sales total and warehouse alone do not settle the foreign corporation's US trade or business or effectively connected income. It reviews where and how the goods are sold and what work occurs in the US. If it has a US trade or business, it generally files its own Form 1120-F; if activity is limited and its conclusion is uncertain, it considers a protective return (IRS: Form 1120-F instructions). The corporation and LLC use their own EINs for their respective filings.

Different for you?

• Your corporation is Canadian: review both countries and the treaty in Canadian corporation US tax returns.
• The US activity test is uncertain: use when foreign owners owe US tax to identify the facts that matter.
• Your disregarded LLC has its own reporting question: see foreign-owned single-member LLC filings.
• Your LLC elected corporate status: see foreign-owned US corporation filings.
• Your company rents US property: see nonresident landlord filings.
• You missed Form 5472 or received its penalty notice: see missed foreign-owner filings.
• You have possible Form 1120-F exposure, missed years, or branch profits tax: bring the records listed above for corporate tax help.