How do I close a foreign-owned U.S. LLC with the IRS?

Start with a final accounting, not just dissolution

List the LLC’s assets, debts, unpaid expenses, owner advances, and remaining cash. Determine when operations ended and what happened during the wind-down. Legal dissolution under the applicable jurisdiction’s rules is separate from federal tax compliance; neither action automatically completes the other. Do not discard records after closing the bank account. You may need them to establish the final transactions, respond to an IRS inquiry, or correct an earlier year.

Report transactions in the closing year

For a wholly foreign-owned disregarded LLC, amounts paid or received in connection with dissolution, owner distributions, and other related-party dealings can require Form 5472 even without sales. Prepare the pro forma Form 1120 and Form 5472 under the special instructions, including applicable final-return indications. A single-member LLC’s cash withdrawal is not automatically a corporate dividend, but a property transfer, debt cancellation, or asset sale can have additional tax consequences. Review substance rather than merely labeling every transfer a distribution.

Use the return appropriate to the tax classification

An LLC taxed as a corporation generally files a final full Form 1120, with Form 5472 when required, and should evaluate Form 966 for a dissolution or liquidation plan. An LLC taxed as a partnership generally files a final Form 1065 and final Schedules K-1, with foreign-partner withholding forms when applicable. A nonresident individual owner may also need a final relevant Form 1040-NR for U.S. business income or taxable dispositions. Ending the LLC does not end the owner’s unrelated filing duties.

Close the IRS business account after resolving filings

The IRS does not cancel or recycle the EIN; it remains assigned to that entity. To request closure of the business account, send the IRS a letter containing the legal name, EIN, business address, and reason for closure, with a copy of the EIN assignment notice if available. Follow the current IRS mailing instructions. The IRS will not close the account until necessary returns are filed and taxes paid. If the business had employees, complete final payroll filings and deposits as well.

Common mistakes

• Assuming a formation company’s dissolution service includes IRS returns.
• Sending an EIN closure letter instead of filing required returns.
• Ignoring missing prior years or liquidation transactions.

Filing requirements

• Reconcile final-year books and file the required returns under the applicable final-period deadlines.
• For a corporate dissolution plan, Form 966 generally is due within 30 days after adoption; assess whether it applies to the entity’s tax classification.
• Retain proof of filings and the IRS account-closure request.

Potential penalties

• Closing does not erase existing tax liabilities or information-return penalties. A missing required final-year Form 5472 can trigger $25,000, with additional penalties for continued failure after IRS notice.

Related IRS forms

• Form 5472
• Form 1120
• Form 1065
• Form 966
• Form 1040-NR

What to consider next

• Identify every open filing year and reconcile owner balances.
• Coordinate legal dissolution with final federal returns and asset transfers.
• Ask Chirino USA to review the closing package before requesting account closure.