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2021-06-07 22:30:09

Form 5472 is an Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business. The purpose of Form 5472 is to provide information when “reportable transactions” occur with a foreign or domestic-related party during the tax year of a “reporting corporation”.

Buried in the The Tax Cut and Jobs Act (TCJA) was an increase in the penalty associated with the international IRS Tax Form 5472 for failure to furnish information or maintain records. The U.S. Congress increased the penalty from $10,000 to $25,000; demostrating a strong focus on foreign persons and their interest in U.S. corporate entities. The increase of the penalty went unnoticed by many; being buried in the 186 pages of the TCJA.

A DE is an entity that is disregarded as an entity separate from its owner for U.S. income tax purposes. Previously, many foreign investors were able to purchase US Real Estate through single member limited liability companies without having to disclose its actual Ultimate Beneficial Owner (UBO). Nonetheless, as of 1/2017, foreign-owned Disregarded Entities have been treated as domestic corporations for reporting purposes. IRS began treating DEs wholly owned or controlled by a foreign person as domestic corporations for UBO disclosure purposes by requiring: