LLCs with only one individual foreign member (Disregarded Entities) need to file Form 5472 with the IRS every year!
Here you have a summary to better understand Form 5472, based on IRS instructions: https://www.irs.gov/instructions/i5472
What needs to be reported?
Related party transactions, which would be financial transactions between the LLC and foreign companies or individuals that have ties to the LLC member, and vice versa.
Company-related parties include:
Company partner(s)
Parents, spouse, siblings, or children of partners
Company owned by the partner or any family member mentioned above
Some examples of transactions:
Initial deposit into the company's bank account.
Withdrawals of money from the company account (e.g. profit distributions).
Hiring services or purchasing products from companies belonging to the individuals mentioned in the previous section.
Loans from/to any of the related parties.
Penalties for failing to complete Form 5472:
A fine of $25,000 will be imposed on any reporting company that fails to file Form 5472 on time and in the prescribed manner. The penalty also applies to failure to maintain records as required by Regulation section 1.6038A-3.
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