U.S. presence and LLC tax liabilities

An LLC with a physical presence in the U.S. is required to pay taxes even if the company has minimal operations or no income. A physical presence may include an office, warehouse, or employees in the United States. This means that, in addition to paying income taxes, the company may also be required to pay other taxes, such as payroll taxes if it has employees, and property or sales taxes if the business sells goods in certain states.

However, even if the LLC is not actively operating in the U.S., owners are required to file annual tax and information forms with the IRS. This requirement applies to all Single Member LLCs, regardless of whether the owner is a U.S. resident or a foreign national. Maintaining timely filing of reports with the IRS is an important element of U.S. tax law and ensures the transparency of a company's tax returns.

Basic forms: 1120 and 5472

Each owner of a Single Member LLC must file two forms each year: Form 1120 and Form 5472. Filing these forms is required by the IRS even if the company was not actively engaged in business or received no income during the reporting period.

• Form 1120 is a corporate tax return that is filed even if there is no income. In this case, a so-called zero Form 1120 is filed, which confirms that the company had no transactions for the reporting year. Despite the absence of financial transactions, the company must remain on the tax books in order for the IRS to be informed of its current status.
• Form 5472 is a required information report for foreign-owned companies. It contains data on the company's financial transactions, including any related party transactions, as well as information on the ownership structure and management of the company. Even if the company had no transactions, Form 5472 must be filed in conjunction with a zero Form 1120.

Filing these forms is not only a mandatory requirement, but also helps a company avoid potential fines that may be imposed for non-compliance with tax legislation. Maintaining tax transparency allows a company to keep "tax clean" and minimize the risk of additional questions from the tax authorities.

No physical presence in the U.S.

If an LLC does not have a physical presence in the U.S., the company is still required by tax law to file tax returns. This is due to international agreements on exchange of tax information between countries, as well as tax compliance principles that apply to all companies registered in the US. An LLC that does not have an office, warehouse or employees in the U.S. is still required to file zero Form 1120 and Information Form 5472 to maintain its tax "purity".

It is important to note that the absence of physical transactions does not exempt a company from the obligation to file annual reports with the IRS. This condition is intended to prevent possible cases of tax evasion and to ensure that the company complies with international information exchange rules. For example, if a company uses a nominal office in the US to receive mail or registration, this minimum presence may also be considered sufficient grounds for filing reports.

Reporting deadlines for non-residents

For non-U.S. residents, the deadline for filing a tax return is April 15 of each year. This deadline applies to all LLCs, including companies that were not active during the taxable year. If the filing deadline is missed, the IRS may impose penalties, which may vary depending on the nature of the violation and the time of the delay.

To avoid penalties, LLC owners are advised to prepare all necessary documents well in advance. Preparing reports can take time, especially if the company has international operations or a complex ownership structure. Planning and filing reports on time can help avoid additional financial losses and remain IRS compliant.

Penalties for late submission of reports

If an LLC owner fails to file Form 5472 and zero Form 1120 on time, the IRS can impose a $25,000 penalty. This penalty applies to both companies that had income and those that were not active during the reporting year. Neglecting to meet filing deadlines can result in significant financial losses, making compliance with deadlines one of the key aspects of tax accounting for LLC owners.

To minimize the risk of penalties, owners are advised to pay special attention to the preparation of documents and submit them before the deadline. In addition to financial penalties, late filing of reports may negatively affect the company's reputation and cause additional IRS audits.

Reporting when income is available

Если LLC имела доход в отчетном году, ей потребуется подать дополнительную форму — Form 1040NR, которая представляет собой налоговую декларацию для нерезидентов. Это обязательное требование для всех владельцев LLC, не являющихся резидентами США. Для подачи формы 1040NR владельцу компании необходимо иметь ITIN (Individual Taxpayer Identification Number). ITIN выдаётся иностранным налогоплательщикам, которые не имеют SSN (Social Security Number), и служит средством идентификации налогоплательщика в системе IRS.

In addition, the company must provide a Profit and Loss Statement (PnL), which includes information about income, expenses and net income for the reporting period. This data allows the IRS to properly evaluate the company's financial activities and calculate its tax liabilities.

Filing reports through professional accountants

Filing tax returns for non-residents can be a complicated process, especially if the company has income and international operations. You can avoid errors and penalties by enlisting the help of a professional accountant with a U.S. license. Tax professionals can help prepare and file all necessary forms, including 5472, 1120 and 1040NR, as well as provide advice on tax reporting and planning.

Our TaxFreeCorp team is ready to assist you with the preparation of all necessary reports and documents, including ITIN registration, income statement preparation, and filing of information forms. We offer full support at all stages of tax interaction with the IRS, which helps our clients to comply with all legal requirements and avoid possible problems.

If you have questions about filing tax returns or need help preparing your documents, contact us. We will provide professional support at all stages and help you fulfill all IRS requirements without unnecessary complications.