Some Foreign-Owned US Companies

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Publication June 6, 2016

Some foreign-owned US companies will have to file additional reports.

The Internal Revenue Service proposed in May that all US limited liability companies that are owned by a single foreign individual or entity should apply for an “employer identification number” or EIN on IRS Form SS-4. This will require disclosing the foreign owner.

The LLC will also have to file an annual information return on IRS Form 5472 reporting any transactions between the LLC and its foreign owner or any other foreign related parties. This is the same annual information that section 6038A of the US tax code already requires be filed by US corporations with 25% or more foreign ownership.

The new filing requirements will apply starting in tax years ending at least 12 months after the IRS republishes these proposals in final form. The agency is collecting comments in the meantime.

An LLC with a single owner does not exist for US tax purposes. The IRS is concerned that such entities are being used to shield foreigners from reporting obligations that apply to other types of entities. The proposal is essentially to treat them the same as foreign corporations with at least 25% foreign ownership for purposes of reporting obligations.


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