A Wyoming LLC Owned by a Nonresident: The Form 5472 Requirement the Owner Did Not Know About

The state annual report was filed every year. The federal Form 5472 never was.

The client's situation

The client lives in South America and formed a Wyoming LLC through an online service, attracted by the low fees and simple maintenance. The LLC receives payments from U.S. clients for software consulting that the owner performs from his home country. He filed the Wyoming annual report every year, kept the registered agent current, and transferred profits to his personal account.

What went wrong

The owner confused state compliance with federal compliance. Wyoming's lack of a state income tax does not affect the federal reporting rules, and the formation service had only handled state filings.

The tax or reporting requirement

Every U.S. single-member LLC owned by a foreign person is subject to the same federal Form 5472 rules, regardless of the state where it was formed. Wyoming, Delaware, Florida or New Mexico — the federal requirement does not change. For each year with reportable transactions, the LLC must file a pro forma Form 1120 with Form 5472. The owner's regular profit transfers were distributions, which are reportable.

The potential IRS exposure

Three years had passed without a federal filing, meaning three separate forms with potential $25,000 penalties each. The client also needed to confirm whether his consulting income created any personal U.S. income tax filing.

How Chirino USA analyzed the situation

We separated the state questions from the federal ones. The Wyoming filings were current. Federally, we reconstructed the three years of contributions and distributions from bank statements. On the income tax side, the consulting was performed entirely outside the United States by the owner, with no U.S. office or dependent agent, so the income was not effectively connected U.S. business income under those facts.

How we addressed the issue

We filed the three late years of pro forma Forms 1120 and Forms 5472 with reasonable cause statements, and filed the current year on time. We explained to the owner which filings belong to Wyoming and which belong to the IRS, so that each year's checklist now has both.

The result

The LLC is current with both the state and the IRS. The owner now has a single annual calendar covering the Wyoming annual report and the federal filing, prepared together each spring.

What other taxpayers in similar situations should know

• No state income tax does not mean no federal filing.
• Form 5472 applies to foreign-owned LLCs in every state.
• A formation service handling your state filings may not be handling federal reporting.
• Profit transfers to the owner are distributions and are reportable.

How Chirino USA can help

If you own a U.S. company from outside the United States and are concerned about a missing or incorrect Form 5472, Chirino USA Accountants & Advisors can review your filings, identify potential exposure, and help determine the appropriate path forward. You can email us or message us on WhatsApp, in English or Spanish.

Sources and official references

• IRS — About Form 5472
• IRS — Instructions for Form 5472
• eCFR — Treas. Reg. §1.6038A-1 (foreign-owned disregarded entities)
• eCFR — Treas. Reg. §1.6038A-4 (penalties and reasonable cause)