How an International Founder Avoided a $50K Penalty With Correct US Filings
Sam's List Editorial | 2026-06-23
How an International Founder Avoided a $50K Penalty With Correct US Filings A founder in Lisbon set up a US LLC to take Stripe payments. He thought he'd done everything right. Two years later he was sitting on $50,000 of IRS penalties he had no idea existed. That's the part nobody warns you about. The form that triggers the penalty isn't a tax return. It's an information return — Form 5472 — and a foreign-owned US LLC can owe nothing in tax and still get hit with five figures in fines for not filing it. This international founder US filing penalty case study is an illustrative composite — a representative version of a situation US tax pros see constantly with non-US founders. The numbers are real in the sense that the penalty rules are real. The founder is a stand-in. Here's how it actually plays out, and how it got fixed. The $25,000 form most foreign founders have never heard of Here's the trap. If you're a non-US person who owns a US single-member LLC, the IRS treats that LLC as a "disregarded entity." For income tax, it's invisible — its activity is treated as yours. But under the rules in Treas. Reg. §1.6038A , a foreign-owned disregarded LLC is treated as a US corporation for one specific purpose : filing Form 5472, an information return that reports transactions between the LLC and its foreign owner. Capital you put in. Money you took out. Loans either direction. The IRS wants to see it. You file it by attaching it to a pro forma Form 1120 — even though a disregarded entity doesn't otherwise file an 1120. Yes, it's weird. That's exactly why founders miss it. The penalty for missing it is the part that stops people cold. Under IRC §6038A(d) , failure to file a required Form 5472 on time is a $25,000 penalty per form, per year . There's no "you only owe tax, so the penalty is small" mercy. Owe zero tax, miss the form, and the number is still $25,000. It was $25,000 going into 2026 and remains in effect. Two missed years. Two forms. $50,000. How a payments setup became a five-figure problem Our founder did what thousands of international founders do. He formed a Wyoming LLC online, got an EIN, opened Mercury and Stripe, and started selling software to US customers. Clean idea, clean execution. What he never got was a single line of advice about US information returns. The formation service sold him an entity. It didn't sell him a tax pro who understood foreign owned LLC compliance . So for two tax years, money moved between him and his LLC — his initial funding, his draws, a small intercompany loan — and not one Form 5472 got filed. Each of those...
