The Form 5472 filing obligation, newly introduced for the 2017 calendar year, requires disclosure to the IRS of US disregarded entities by foreign persons. This includes non-US individuals, trusts and corporations.
This reporting requirement is very broad, with no minimal filing thresholds. However, failure to file in a timely manner can give rise to a minimum penalty of $10,000 per failure. Additional penalties may also be imposed.
The reporting requirement only relates to non-US owners of the US disregarded entities, which will commonly be a single member US LLC. However, the filing obligation is not dependent on any US source income being generated by, or US situs assets being held within, the US disregarded entity.
There will be practical steps that need to be taken, such as obtaining a US identifying number, to enable timely filing of Form 5742.
Action should be taken now to ensure that any potential filing obligation is understood and any required filings can be submitted in a timely manner.
If any assistance is required for this compliance, we would be very happy to discuss further.