Non-Resident LLC Compliance Guide 2025 (Taxes, BOI & ITIN)

Author's Bio: The Foreign Founder Team has assisted over 500 non-resident entrepreneurs in navigating the complex US tax system. From filing Form 5472 to securing ITINs, we specialize in keeping foreign-owned LLCs compliant and penalty-free.

Trust Signal: Why trust this guide? We don't just write about compliance; we practice it. The strategies below are based on actual IRS audits and successful filings for clients from 40+ countries. We monitor IRS updates daily so you don't have to.

Is your US LLC a ticking time bomb?

It sounds dramatic, but for non-resident founders, it's the reality. You formed your LLC to access the US market, Stripe, and global banking. But the IRS (Internal Revenue Service) and FinCEN (Financial Crimes Enforcement Network) have built a minefield of forms tailored specifically for foreign owners.

The Problem: Most non-residents believe "No US income means no US taxes, so I don't need to file anything." This is the single most expensive mistake you can make.

The Agitation: The IRS doesn't care if you made $0 profit. If you fail to file Form 5472, the automatic penalty is $25,000. Yes, twenty-five thousand dollars. That's enough to bankrupt most startups before they even launch. Add in the new BOI Reporting requirements with their $591/day fines, and your dream business could turn into a financial nightmare.

The Solution: This guide is your shield. We will break down the "Big 3" compliance pillars for 2025: Tax Reporting (Form 5472), Transparency (BOI), and Identity (ITIN). We'll show you exactly what to file, when to file it, and how to prove to the IRS that you owe them nothing.

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Pillar 1: Beneficial Ownership Information (BOI) – The New 2025 Beast

In 2024, the US Corporate Transparency Act introduced a massive change: the Beneficial Ownership Information (BOI) report. If you ignored this in 2024, 2025 is the year enforcement begins in earnest.

What is BOI Reporting?

The US government wants to know who actually owns anonymous LLCs to fight money laundering. They don't care about your tax status; they care about your identity.

Every US LLC (with very few exceptions) must file a report with FinCEN (not the IRS) declaring:

1. Who the company is: Legal name, DBA, address, EIN.
2. Who the owners are: Name, date of birth, address, and a copy of a passport or driver's license for anyone owning 25%+ or exercising "substantial control."

The "FinCEN ID" Hack

To simplify this, you can apply for a FinCEN ID. This is a unique number assigned to you personally.

• Without FinCEN ID: You must upload your passport copy every time you form a new company or update company details.
• With FinCEN ID: You upload your passport once to get the ID. Then, you just give your FinCEN ID to your company. If you move houses or renew your passport, you update your FinCEN ID profile, and all your companies are automatically updated.

Deadlines & Fines (2025 Updates)

The deadlines are strict and confusing. Here is the breakdown:

LLC Formation Date	Filing Deadline	Fine for Late Filing
Before Jan 1, 2024	Was due Jan 1, 2025	$591 per day (Civil penalty)
During 2025	Within 30 days of formation*	$591 per day
Changes (Address/Passport)	Within 30 days of the change	$591 per day

*Note: In 2024, new LLCs had 90 days. For 2025, it reverts to 30 days unless FinCEN extends it. Always aim for 30 days to be safe.

Insider Warning: Many registered agents charge $100-$200 to file this for you. Don't pay them. The BOI report is free to file on the FinCEN website and takes about 15 minutes.

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Pillar 2: IRS Form 5472 & 1120 – The $25,000 Trap

This is the most critical section of this guide. If you only remember one thing, remember Form 5472.

Who Must File?

You must file Form 5472 if your US LLC is:

1. Disregarded Entity: A Single-Member LLC.
2. Foreign-Owned: Owned 25% or more by a non-US person.

If you have a Multi-Member LLC (Partnership) or C-Corp, the rules are different (usually Form 1065 or 1120), but for the 90% of solopreneurs reading this, Form 5472 is mandatory.

The "Pro-Forma" 1120

Form 5472 cannot be filed alone. It must be attached to a "Pro-Forma" Form 1120 (U.S. Corporation Income Tax Return).

• Why "Pro-Forma"? Because a Single-Member LLC is usually ignored for tax purposes. You are only using the 1120 as a "jacket" to deliver the Form 5472.
• What to fill out: You only fill out the top section (Name, Address, EIN) and write "Foreign-Owned U.S. DE" across the top. You leave the income figures blank (unless you actually opted to be taxed as a corporation).

Part V: Reportable Transactions

The purpose of Form 5472 is to report money moving between the LLC and its Foreign Owner.

• Did you put money into the LLC to start it? (Capital Contribution) -> Report it.
• Did the LLC pay for your personal lunch? (Distribution) -> Report it.
• Did the LLC pay you a service fee? -> Report it.

Even if the amount is $100, it must be reported. If you fail to report a transaction, the form is incomplete, and the $25,000 penalty applies.

How to File (The "Fax" Myth)

For years, digital nomads shared a "secret fax number" for the IRS.

• Reality Check: The IRS fax lines are often closed or meant only for specific forms.
• The Safe Way: Mail it. Use a courier like DHL, FedEx, or UPS with tracking. Send it to the IRS center in Ogden, UT (check the latest instructions on IRS.gov as addresses change).
• Deadline: April 15th of the following year. (e.g., for 2024 activity, file by April 15, 2025).

Contextual CTA: Terrified of making a mistake on Form 5472? One wrong checkbox can trigger an audit. We recommend using a specialized CPA for your first year. Check out our review of Best LLC Formation Services – many premium tiers include CPA consultations.

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Pillar 3: US Income Tax & "ETBUS"

"Do I owe taxes?" The answer depends on whether your business is ETBUS: Engaged in Trade or Business in the United States.

The 3 Golden Rules for 0% Tax

For a non-resident selling digital services or products (dropshipping/Amazon FBA) to be tax-free, you generally need to meet these criteria:

1. No US Dependent Agent: You don't have employees in the US who make decisions for you.
2. No US Office: You don't rent a physical office or warehouse (Amazon FBA warehouses usually don't count as a "permanent establishment" under most tax treaties, but this is complex).
3. Services Performed Abroad: If you are a consultant, you do the work from your home country, not while visiting New York.

If you meet these, your income is NOT Effectively Connected Income (ECI), and you owe $0 US income tax.

The "Protective Return" (Form 1120-F)

Even if you believe you owe $0, some experts recommend filing a Protective Return (Form 1120-F) for foreign corporations.

• Why? If the IRS audits you 5 years later and decides you were ETBUS, and you never filed a return, you lose all your deductions. You pay tax on gross revenue.
• The Strategy: Filing a protective return starts the "statute of limitations" clock (usually 3 years). It tells the IRS: "I don't think I owe tax, but if I do, here are my deductions."

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Pillar 4: ITIN (Individual Taxpayer Identification Number)

If you are doing business in the US, you will eventually hit a wall without an ITIN.

• PayPal/Stripe: Often request it after you hit certain processing volumes.
• Banks: Chase and other premium banks require it or a SSN.
• Tax Treaty: If you want to claim a lower withholding tax rate (e.g., on royalties or dividends) because your country has a treaty with the US, you need an ITIN to claim it.

How to Apply (Form W-7)

You cannot just "apply" for an ITIN. You must have a tax reason to get one.

1. File with your Tax Return: Usually, you attach Form W-7 to your first federal tax return (1040-NR).
2. The Exception: If you need it for a bank account or third-party withholding exception, you can apply using an exception code, but this is harder to get approved.
3. Certified Acceptance Agent (CAA): The easiest way. A CAA is authorized by the IRS to verify your passport so you don't have to mail your original passport to the IRS (which takes 3-4 months to return).

Why do you want an ITIN? Beyond compliance, an ITIN is the key to building a personal credit score in the US. Read our guide on How to Build US Personal Credit as a Non-Resident to see how this number gives you access to premium credit cards.

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Pillar 5: State Franchise Taxes & Annual Reports

Federal (IRS) compliance is one thing. State compliance is another.

Wyoming vs. Delaware vs. New Mexico

State	Requirement	Cost	Due Date
Wyoming	Annual Report	$60	First day of anniversary month
Delaware	Franchise Tax	$300	June 1st
New Mexico	None*	$0	N/A
Florida	Annual Report	$138.75	May 1st
California	Franchise Tax	$800	15th day of 4th month
Texas	Franchise Tax Report	$0 (if <$2.4M rev)	May 15th
New York	Biennial Statement	$9	Every 2 years
Nevada	Annual List + License	~$350	Last day of anniversary month

*Note: New Mexico has no annual report for LLCs, but recent changes might introduce new filing requirements. Always check with your registered agent.

Warning: If you fail to pay this, your LLC goes into "Administrative Dissolution." You lose your liability protection, and your bank account will be frozen.

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Deep Dive: What Exactly is "ETBUS"?

This concept confuses everyone. Let's clarify.

ETBUS stands for Engaged in Trade or Business in the United States.

To be ETBUS, you generally need two things:

1. Considerable, Continuous, and Regular activity in the US.
2. US Source Income.

Examples:

• Scenario A (Not ETBUS): You live in France. You sell software to US customers via Stripe. You have no US employees. You have no US office. -> 0% US Tax.
• Scenario B (ETBUS): You live in France. You hire a sales manager in New York. He visits clients and signs contracts for you. -> You are ETBUS. You owe tax on the income he generates.
• Scenario C (Amazon FBA): You use Amazon FBA warehouses. This is a grey area, but most tax treaties say a warehouse used solely for storage and delivery does not create a "Permanent Establishment." -> Likely 0% Income Tax (but you might owe Sales Tax).

The Protective Return (Form 1120-F): Why File It?

If you are Not ETBUS, you owe $0 tax. So why file a tax return?

The Risk: If you don't file, the statute of limitations never starts. The IRS can audit you 20 years later. If they decide you were ETBUS (maybe they change their interpretation of "digital presence"), they can assess a tax bill. Crucially: If you never filed a return, you are not allowed to claim any deductions. You will be taxed on your Gross Revenue, not your Net Profit.

The Solution: File Form 1120-F with the "Protective Return" box checked.

• It reports $0 tax due.
• It preserves your right to claim deductions in the future if the IRS challenges you.
• It starts the 3-year audit clock.

Technical Guide: How to Fill Out Form 5472

Since you must mail this, you need to get it right.

1. Part I (Reporting Corporation): Enter your LLC's name, address, and EIN. Check the box "Foreign-owned U.S. DE".
2. Part II (25% Foreign Shareholder): Enter Your Name and Foreign Address. For "Reference ID number", you can write "FOREIGN" if you don't have a specific ID.
3. Part III (Related Party): Usually, this is you again.
4. Part IV (Monetary Transactions):
   • Line 11 (Rents/Royalties): Did the LLC pay you for IP?
   • Line 15 (Other): Did the LLC pay for your travel?
   • Line 20 (Amounts borrowed): Did you loan money to the LLC?
   • Line 21 (Amounts loaned): Did the LLC loan money to you?
5. Signature: The form itself is not signed; it is attached to the signed 1120.

Tip: For the "Pro-Forma 1120," you only fill out the Name/Address/EIN block at the top, sign the bottom, and attach the 5472 behind it. Write "Foreign-Owned U.S. DE" in red ink at the top of the 1120.

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Decision Logic: Your 2025 Compliance Roadmap

Here is a visual decision tree to help you navigate your obligations.

graph TD
    A["Start: Non-Resident US LLC"] --> B{"Did you form in 2024 or before?"}
    B -- Yes --> C["File BOI Report ASAP (Due Jan 1, 2025)"]
    B -- No (Formed in 2025) --> D["File BOI within 30 days"]
    
    A --> E{"Is it a Single-Member LLC?"}
    E -- Yes --> F{"Foreign Owner?"}
    F -- Yes --> G["File Form 5472 + Pro-Forma 1120"]
    
    G --> H{"Any US Employees/Office?"}
    H -- No --> I["Likely 0% US Tax (Check Treaty)"]
    H -- Yes --> J["File 1120-F & Pay Income Tax"]
    
    A --> K["Pay State Franchise Tax (Annually)"]
    
    style C fill:#ffcccc,stroke:#333,stroke-width:2px
    style G fill:#ccffcc,stroke:#333,stroke-width:2px
    style I fill:#e6f3ff,stroke:#333,stroke-width:2px

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Conclusion: Don't Let Paperwork Kill Your Dream

Compliance is boring. It's tedious. It feels like a waste of time. But in the US system, it is the foundation of your business legitimacy.

The US banking system is tightening. Banks like Mercury and Relay are closing accounts of LLCs that fall out of "Good Standing" with their state or fail to provide EIN verification. By staying compliant, you aren't just avoiding fines; you are protecting your access to the global financial system.

Next Steps:

1. Check your State Status: Go to your state's Secretary of State website and search for your LLC. Ensure it says "Active" or "Good Standing."
2. Calendar the Deadlines: Put April 15 and your State Report due date in your Google Calendar with a 2-week reminder.
3. Get a Bank Account: Now that you know the rules, make sure you have the financial infrastructure to handle it. Read our guide on Best US Business Bank Accounts.

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Frequently Asked Questions (FAQ)

What happens if I file Form 5472 late?

Direct Answer: You will likely receive an automatic penalty notice for $25,000. Explanation: The IRS system is automated. If the postmark on your envelope is after April 15, the computer sends the fine. You can try to appeal with a "Reasonable Cause" letter, but success is not guaranteed and often requires expensive legal help.

Do I need a CPA to file these forms?

Direct Answer: It is highly recommended for the first year. Explanation: While you can file them yourself (DIY), the cost of a mistake ($25k) far outweighs the cost of a CPA ($500-$1000). Once you see how it's done correctly, you might be able to copy the method for future years if your situation doesn't change.

Does a Non-Resident LLC need to file 1099s?

Direct Answer: Yes, if you pay US persons. Explanation: If your LLC hires a US freelancer or contractor and pays them more than $600 in a year, you must file Form 1099-NEC to report that payment to the IRS. If you only hire non-US contractors who work outside the US, you generally do not need to file 1099s for them (but you should collect a Form W-8BEN from them for your records).

Can I just close the LLC to avoid fines?

Direct Answer: No. Explanation: You cannot simply "ghost" the IRS. To properly close (dissolve) an LLC, you must file final tax returns and pay any outstanding fees. If you walk away, the fines accumulate, and they can technically pursue you personally, especially if you ever want to visit the US or open another business there.