Short answer: A U.S. single-member LLC owned 100% (directly or indirectly) by a foreign person or company, which has not filed Form 8832 to be taxed as a corporation, is a "foreign-owned U.S. disregarded entity." It pays no federal income tax itself, but every year it must file a pro forma Form 1120 containing only identifying information, with Form 5472 attached, reporting every transaction with its owner and related parties: capital contributions, distributions, loans and expenses paid on its behalf all count. For a calendar-year LLC the due date is April 15 of the following year, extendable to October 15 with Form 7004. The package is currently mailed or faxed to the address in the IRS instructions rather than e-filed.
Step 1: Confirm that you are a foreign-owned U.S. disregarded entity
Three conditions together: (1) an LLC formed under the law of a U.S. state; (2) exactly one member; and (3) no Form 8832 election to be taxed as a corporation. The LLC is then "disregarded" for federal income tax, and its income and expenses belong to the sole member.
If that sole member is a foreign person, whether a Chinese individual, a Chinese company, a Hong Kong company or a holding entity one more layer up, the LLC falls under the Treasury regulations issued at the end of 2016 (T.D. 9796, Reg. §1.6038A-1): solely for §6038A information reporting it is treated as a domestic corporation and becomes a "reporting corporation."
Two situations that are easily confused: if the sole member is a U.S. company or a U.S. tax resident, this article does not apply; and if the LLC has two or more members, its default classification is a partnership that files Form 1065, not the pro forma 1120 discussed here.
| Your structure | Federal filing | Covered here? |
|---|---|---|
| U.S. LLC 100% owned by a Chinese individual (no Form 8832) | Pro forma 1120 + 5472; the individual may separately need Form 1040-NR | Yes |
| U.S. LLC 100% owned by a Chinese company (no Form 8832) | Pro forma 1120 + 5472; the parent may separately need Form 1120-F | Yes |
| U.S. LLC owned by a Chinese company that elected C corporation treatment | Full Form 1120 with tax computation + 5472 | No; see the Form 5472 solution page |
| U.S. LLC owned by two Chinese shareholders | Form 1065 + Schedules K-1, Section 1446 withholding | No |
Step 2: Get the LLC its own EIN
The reporting corporation must file under its own EIN. The most common snag in practice is an LLC that never applied for one, or a filing prepared under the owner's ITIN or the parent's EIN. Both get rejected or fail to match IRS records.
Apply on Form SS-4. The responsible party is the foreign owner or the parent's principal officer; if that person has no SSN or ITIN, write "Foreign" on line 7b. Applicants outside the U.S. cannot use the online EIN tool and apply instead by the international telephone line, fax or mail, so allow two to six weeks.
The same EIN is later used for the Form 7004 extension, the U.S. bank account, state registrations and Form 1042 withholding. Get it once and do not apply twice.
Step 3: The pro forma Form 1120 contains only four things
"Pro forma" means the Form 1120 computes no tax; it is the cover sheet for Form 5472. Per the IRS instructions for Form 5472, you complete only the name and address of the LLC, item B (EIN) and item E (the initial return, final return, name change and address change boxes) on page 1, and write "Foreign-owned U.S. DE" across the top.
Every income, deduction and tax line stays blank, and Schedules C, J, K, L, M-1 and M-2 are not attached. The signature block is signed by a person authorized to act for the LLC.
In the LLC's first year, check "Initial return" in item E. If the LLC has been dissolved, or the sole member has become a U.S. person, check "Final return" and report the dissolution or disposition amounts in Part V of Form 5472.
Step 4: Form 5472, part by part
Form 5472 works on a one-form-per-related-party basis. A disregarded entity completes at least Parts I, II, III and V, plus Part IV whenever money moved:
| Part | What goes in it | Watch-outs for a disregarded entity |
|---|---|---|
| Part I: Reporting corporation | Name, address, EIN, state of formation, principal business activity, tax year, total assets and gross receipts; the box identifying the filer as a foreign-owned U.S. DE | Enter zeros rather than leaving fields blank when there was no activity |
| Part II: 25% foreign shareholder | The direct shareholder and the ultimate indirect shareholder: name, address, country of citizenship or organization, foreign taxpayer identification number (China's unified social credit code or ID number), reference ID | When a Chinese individual holds through a Hong Kong company, both the Hong Kong company and the individual are listed |
| Part III: Related party | The one related party this form covers (usually the owner, or a sister company under common control) | A separate Form 5472 for every related party with transactions during the year |
| Part IV: Monetary transactions | Sales, purchases, service fees, rents, royalties, interest, and loan balances at the beginning and end of the year or the monthly average | Expenses the owner paid for the LLC and payments the LLC made for the owner must be classified and reported |
| Part V: Disregarded-entity transactions | Amounts connected with formation, dissolution, acquisition or disposition, and the owner's contributions and distributions | The part most often missed: if the owner sent or took money, there is something to report |
| Part VI: Nonmonetary and less-than-full-consideration transactions | Free use of the owner's assets, free services, guarantees | Describe the transaction; do not skip it because no cash moved |
A frequent question: "The LLC only received two capital contributions from the owner and paid one registered-agent fee this year. Do we still file?" Yes. The contributions themselves are reportable in Part V, and a registered-agent fee advanced by the owner is a contribution or loan from the owner to the LLC, which is also reportable.
Step 5: How and where to file
The pro forma 1120 with Form 5472 cannot currently go through the normal corporate e-file channel; tax software generally rejects a Form 1120 with no tax data. The IRS instructions for Form 5472 give a dedicated mailing address and fax number for foreign-owned U.S. DEs (the Ogden, Utah campus). Use the current year's instructions.
Fax and keep the transmission confirmation, or mail by a trackable courier and keep the delivery record. The IRS does not send an acknowledgment, so that proof is the only evidence that you filed on time. File it with the return workpapers.
If you need an extension, Form 7004 is also filed under the LLC's own EIN using the form code for Form 1120. The extension only extends the filing; there is no tax to pay because the disregarded entity itself owes no federal income tax.
Step 6: Deadlines and penalties
| Item | Calendar-year deadline | Notes |
|---|---|---|
| Pro forma 1120 + 5472 | April 15 of the following year | Same as a regular Form 1120: the 15th day of the 4th month after year end |
| Form 7004 extension | File by April 15 | Automatic six-month extension to October 15 |
| Failure to file, late filing or incomplete information | — | $25,000 per Form 5472 per year, plus $25,000 for each 30-day period the failure continues after IRS notice |
| Statute of limitations | — | Until the Form 5472 is filed, the three-year assessment period for the entire return does not start (§6501(c)(8)) |
Penalty relief is available for reasonable cause, but "we did not know about the requirement" rarely succeeds. For a first failure that has been voluntarily corrected, a well-written statement is still worth the effort; see how to write a reasonable-cause statement for a late Form 5472.
Do not forget the obligations outside the disregarded entity
- The owner's own income tax. The LLC's income belongs to the owner. If the LLC actually operates in the U.S. (employees, a warehouse, U.S. customers), a Chinese individual owner may need Form 1040-NR and a Chinese corporate owner may need Form 1120-F, with Form 8833 disclosing any treaty position.
- Withholding on payments to the owner. Interest, royalties and other U.S.-source FDAP income paid by the LLC to its foreign owner require withholding and Forms 1042 and 1042-S; see the withholding solution page.
- State annual taxes and reports. Most states charge LLCs an annual tax or require an annual report (Delaware's LLC tax on June 1, California's Form 568 and annual LLC tax, for example). None of that disappears because the LLC is disregarded federally.
- Beneficial ownership information (BOI). Under FinCEN's March 2025 interim final rule, entities formed in the U.S. are currently not required to report, but the rules keep moving; check FinCEN's latest guidance.
- Record keeping. §6038A requires books and records sufficient to verify related-party transactions, and the penalty applies to missing records too.
