Forming a U.S. company as a foreign national is straightforward. You pick a state, file your articles, get an EIN from the IRS, and open a bank account. Most formation services walk you through these steps without issue. What they don’t tell you is that several federal agencies require additional filings that have nothing to do with your tax return, and the penalties for missing them can be severe.
This post covers the federal forms and reporting obligations that foreign-owned U.S. businesses commonly overlook. Some of these apply the moment you form your entity. Others kick in when you reach certain ownership thresholds or conduct specific types of transactions. All of them carry real penalties for non-compliance.
IRS Form 5472: The Big One Most Foreign Owners Miss
If a foreign person owns 25% or more of a U.S. corporation or LLC, that entity must file IRS Form 5472 (Information Return of a 25% Foreign-Owned U.S. Corporation) for any year in which it has “reportable transactions” with a related foreign party. Reportable transactions include sales, rents, royalties, loans, capital contributions, distributions, and even the initial formation of the entity.
Here’s the part that trips people up: since 2017, all foreign-owned single-member LLCs that are treated as disregarded entities for tax purposes must file a pro forma Form 1120 (U.S. Corporation Income Tax Return) with Form 5472 attached. Before 2017, these LLCs had no federal filing requirement at all. Many foreign owners who formed single-member LLCs during or after 2017 still don’t know they need to file.
The penalty for failing to file Form 5472 is $25,000 per form, per year. Filing a substantially incomplete form counts as a failure to file. If the IRS notifies you and you still don’t file within 90 days, the penalty increases by $25,000 for each additional 30-day period.
IRS Form 1120-F: Protective Filing for Foreign Corporations
Foreign corporations engaged in a U.S. trade or business must file Form 1120-F (U.S. Income Tax Return of a Foreign Corporation). This covers income that’s “effectively connected” with a U.S. business activity. The deadline is the 15th day of the 4th month after the tax year ends if the entity has a U.S. office, or the 15th day of the 6th month if it doesn’t.
What makes this form dangerous to skip: if a foreign corporation doesn’t file 1120-F on time, the IRS can tax its effectively connected income at the gross amount with no deductions or credits. That means 100% of revenue gets taxed, not just profit. Filing a “protective return” (even when you believe no tax is owed) preserves your right to claim deductions later. Skipping the filing can cost far more than the accounting fees.
BEA Form BE-13: Commerce Department Reporting
The Bureau of Economic Analysis (BEA) requires all new foreign direct investments in the U.S. to be reported on Form BE-13, regardless of size. If the investment exceeds $40 million, you file the full form (BE-13A for acquisitions, BE-13B for new entities). Below $40 million, you file the shorter BE-13 Claim for Exemption. The deadline is 45 calendar days from the transaction date. We covered this in detail in our companion article, BEA Form BE-13: The Filing Requirement Foreign Business Owners Don’t Know About.
Penalties range from $2,500 to $25,000 per violation, with criminal penalties of up to $10,000 and one year imprisonment for willful non-compliance.
CFIUS: National Security Review for Certain Investments
The Committee on Foreign Investment in the United States (CFIUS) reviews transactions that could give a foreign person control over a U.S. business with national security implications. CFIUS filings are mandatory in two situations: when a foreign government holds a substantial interest (49% or more) in the foreign investor and the investor acquires 25% or more of a “TID” (critical technology, critical infrastructure, or sensitive personal data) business, or when the investment gives the foreign investor access to critical technology requiring export authorization.
Even when mandatory filing doesn’t apply, CFIUS has the authority to initiate a review of any foreign investment at any time, including after the deal closes. There is no deal-size threshold and no statute of limitations. Penalties for failing to file a mandatory declaration can reach the full value of the transaction.
Most small business formations won’t trigger CFIUS review, but foreign nationals investing in technology, defense, data, telecommunications, or critical infrastructure should evaluate whether a voluntary CFIUS filing makes sense.
FinCEN Form 114 (FBAR): Foreign Bank Account Reporting
This one works in reverse. If you’re a U.S. person (which includes resident aliens and U.S. entities) with financial interest in or signature authority over foreign financial accounts, and the combined value of those accounts exceeds $10,000 at any point during the year, you must file FinCEN Form 114, commonly known as the FBAR.
The deadline is April 15 following the calendar year, with an automatic extension to October 15. Filing is done electronically through FinCEN’s BSA E-Filing System. The FBAR applies even if the account balance only exceeded $10,000 for a single day.
Penalties for willful violations can reach $165,353 per account per year or 50% of the account balance, whichever is greater. Non-willful violations carry lower penalties but are still enforced.
IRS Form 8938: FATCA Reporting
Form 8938 (Statement of Specified Foreign Financial Assets) is a separate requirement from the FBAR, even though it covers some of the same accounts. It’s filed with your federal tax return and applies to U.S. taxpayers (including resident aliens) whose specified foreign financial assets exceed certain thresholds. For single filers living in the U.S., the threshold is $50,000 at year-end or $75,000 at any time during the year. For those living abroad, the thresholds are higher ($200,000/$300,000).
Yes, you may need to file both the FBAR and Form 8938 for the same accounts. They go to different agencies (FinCEN and IRS, respectively) and have different thresholds and penalties.
AFIDA: Agricultural Land Disclosure
If a foreign person acquires any interest in U.S. agricultural land, the Agricultural Foreign Investment Disclosure Act (AFIDA) requires filing Form FSA-153 with the USDA’s Farm Service Agency within 90 days. There is no minimum acreage or dollar threshold. Any interest, in any amount of agricultural land, triggers the filing.
The penalty for failing to file is a fine of up to 25% of the fair market value of the foreign person’s interest in the land. Several states (including Iowa, Kansas, and Missouri) have additional state-level restrictions on foreign ownership of agricultural land.
W-8BEN and W-8BEN-E: Withholding Certificates
Foreign individuals and entities receiving U.S.-source income (dividends, interest, royalties, rents, service fees) must provide Form W-8BEN (individuals) or W-8BEN-E (entities) to the payer to claim treaty benefits or certify their foreign status. Without a valid W-8 form on file, the payer is required to withhold 30% of every payment.
These forms are valid for three calendar years after signing and must be renewed. If yours expires and the payer doesn’t have a current one, 30% withholding resumes automatically.
SEC Schedule 13D/13G: Public Company Ownership
Foreign investors who acquire 5% or more of any class of equity securities in a publicly traded U.S. company must file Schedule 13D with the SEC within five business days. Passive investors with no intent to influence or control may qualify for the shorter Schedule 13G. Material changes require amendments within two business days.
This only applies to publicly traded companies, but it catches foreign investors by surprise because the 5% threshold is lower than most ownership reporting thresholds.
Summary: What You Need to File and When
| Form | Agency | Trigger | Deadline | Penalty |
|---|---|---|---|---|
| Form 5472 | IRS | 25%+ foreign ownership of U.S. entity with reportable transactions | With income tax return | $25,000/year |
| Form 1120-F | IRS | Foreign corp with U.S. trade or business | 4th or 6th month after year-end | Loss of all deductions |
| BE-13 / Claim for Exemption | BEA | 10%+ foreign ownership, new investment | 45 calendar days | $2,500 to $25,000 |
| CFIUS Declaration | Treasury | Foreign control of national security business | Before or after closing | Up to transaction value |
| FBAR (Form 114) | FinCEN | $10,000+ in foreign accounts | April 15 (ext. Oct 15) | Up to $165,353/account |
| Form 8938 | IRS | $50,000+ in foreign assets (U.S. resident) | With tax return | 40% accuracy penalty |
| FSA-153 (AFIDA) | USDA | Any foreign interest in U.S. farmland | 90 days | 25% of land value |
| W-8BEN / W-8BEN-E | IRS | Receiving U.S.-source income | On request from payer | 30% withholding |
| Schedule 13D/13G | SEC | 5%+ ownership of public company stock | 5 business days | SEC enforcement |
What If You’ve Missed a Filing?
If you’re reading this list and realizing you’ve missed one or more of these filings, the natural question is: should you file late on your own, or should you talk to a professional first? There’s no universal answer. Each agency handles late filings differently, and the risk profile varies significantly by form.
Low Risk to File Late on Your Own
BEA Forms (BE-13, BE-12): The BEA is a data collection agency. Their priority is collecting data. From what we’ve seen in practice, voluntary late filings have typically been accepted without penalty, though outcomes can vary by situation. Filing through the BEA eFile system as soon as you become aware of the obligation is the typical approach.
W-8BEN / W-8BEN-E: These aren’t filed with a government agency. You provide them to payers. If yours expired, submitting an updated one to the payer should resolve future withholding. Over-withholding from periods without a valid form on file may be recoverable on your tax return, but consult your tax preparer on the specifics.
Get Professional Advice Before Filing Late
IRS Form 5472: At $25,000 per form per year, the penalties stack fast. If you’ve missed multiple years, filing all at once without professional guidance could trigger penalty assessments across every missed year. A tax attorney or tax advisor specializing in international tax can evaluate whether a “reasonable cause” statement is appropriate for your situation. The IRS has granted reasonable cause relief in cases where taxpayers demonstrated they were unaware of the requirement and acted promptly once informed, though each case is evaluated individually.
IRS Form 1120-F: Late filing means losing deductions entirely. A tax professional can evaluate whether filing a protective return for open tax years makes sense for your situation.
FBAR (Form 114): The IRS offers two formal programs for late FBAR filers. The Streamlined Filing Compliance Procedures allow taxpayers who can certify their non-compliance was non-willful to file late FBARs and amended tax returns with reduced or no penalties. The Voluntary Disclosure Program is for taxpayers with willful violations who want to come into compliance before the IRS finds them. Both programs have specific eligibility requirements and preparation steps. Getting professional guidance before filing late FBARs can help you determine which program, if any, applies to your situation.
IRS Form 8938: Similar to FBAR, late filing should be handled through the Streamlined Procedures if available. Filing on your own without a reasonable cause statement risks the 40% accuracy-related penalty.
CFIUS: If you believe a past transaction should have been declared to CFIUS, speaking with a national security attorney is strongly worth considering. CFIUS has the authority to unwind completed transactions, and the complexity of these filings typically requires specialized counsel.
AFIDA (FSA-153): The 25% of land value penalty makes this one worth professional guidance if significant acreage is involved. For smaller parcels, many practitioners recommend contacting the local Farm Service Agency office directly to file, though your specific circumstances may warrant professional input.
The General Rule
Based on what we’ve seen, data collection forms (BEA surveys, W-8 certificates) tend to carry lower risk when filed late voluntarily. Penalty-heavy filings (IRS forms, FBAR, CFIUS) carry higher stakes, and professional guidance before filing can help you avoid outcomes that are difficult to reverse. In most cases, the cost of a consultation is small compared to the potential penalties.
What BCA Recommends
If you’re a foreign national who owns a U.S. business or has invested in one, don’t assume that your tax preparer or formation attorney has covered all the filings. The BEA, CFIUS, FinCEN, and USDA requirements fall outside what most tax and legal professionals handle unless they specialize in cross-border compliance.
BCA works with foreign-owned businesses to identify gaps in their compliance filings and connect them with the right specialists. If you’re not sure whether you’ve filed everything required, contact us. We’ll review your situation and make sure nothing has been missed.
Disclaimer: This article is for informational purposes only and is not legal, tax, or financial advice. BCA is not a licensed professional services firm. We help clients assess their situations and work with licensed attorneys, tax advisors, and other qualified professionals on your behalf. Read our full Disclaimer and Terms of Use. Have questions? Contact BCA and let us put the right team together for you.
Sources and Further Reading
- IRS Form 5472 Instructions: irs.gov/instructions/i5472
- IRS Form 1120-F Instructions: irs.gov/instructions/i1120f
- BEA Form BE-13 Survey: bea.gov/surveys/be13
- CFIUS Overview: home.treasury.gov
- FinCEN FBAR Filing: fincen.gov
- IRS Form 8938 (FATCA): irs.gov
- USDA AFIDA Information: fsa.usda.gov
- SEC Schedule 13D/13G Guidance: sec.gov