If you're a foreign person who owns a US disregarded entity—such as a single-member LLC—you need to file Form 5472 annually. One critical requirement often catches filers off guard: The IRS requires an original wet-ink signature (an electronic signature is not accepted). Adding to the challenge, Form 5472 for foreign-owned disregarded entities is not e-filable, meaning you must choose between mailing or faxing a paper return.

What Is Form 5472?

Form 5472 is an information return that reports transactions between a foreign-owned US disregarded entity and related parties. It doesn't calculate tax but provides the IRS transparency into cross-border transactions like rent payments, management fees, loans, and capital contributions.

The Wet Ink Signature Requirement

According to the IRS Instructions for Form 5472, when filing by fax, the form must bear an original signature in ink. This means:

• You must physically sign the paper form with a pen
• Printed electronic signatures are not acceptable
• Photocopies of signatures are not acceptable
• The original signed document must be faxed to the IRS

The IRS maintains this requirement to ensure document authenticity and prevent fraud in international tax reporting.

Why E-Filing Isn't an Option

Unlike many IRS forms, Form 5472 for foreign-owned disregarded entities cannot be filed electronically. This leaves foreign owners with only two filing options:

1. Mail: Send the original signed form via postal service
2. Fax: Transmit the original signed form by fax

Neither option is particularly modern or convenient, but these are currently the only IRS-accepted methods for foreign-owned disregarded entity filers.

Why Many Choose Faxing Over Mailing

Despite the wet-ink signature requirement, many foreign-owned entities prefer faxing because:

• Speed for late filings: Faxing is faster than international mail and provides immediate transmission confirmation
• Proof of delivery: Fax confirmations prove timely filing if disputes arise with the IRS
• Geographic reliability: More dependable than international mail from many countries
• Tracking: Unlike mail, you know immediately whether transmission was successful

How to Properly Sign and Fax Form 5472

1. Complete and print the form thoroughly
2. Sign with a pen in blue or black ink (blue ink shows clearly that it's an original signature)
3. Date the signature as of the signing date
4. Fax to the appropriate IRS number (verify current number on IRS.gov)
5. Retain the fax confirmation showing successful transmission
6. Keep the original signed form in your records for at least three years

The Cost of Non-Compliance

The IRS can assess a $25,000 penalty for each Form 5472 that is not filed, filed late, or filed incompletely. A form without the required wet-ink signature may be treated as not filed at all. If the failure continues for more than 90 days after IRS notification, an additional $25,000 penalty may apply.

The signature requirement is considered part of filing a complete return, so submitting a fax without an original wet-ink signature could trigger these substantial penalties.

Mailing as an Alternative

If faxing seems cumbersome or unreliable, you can mail Form 5472 instead. When mailing:

• Use certified mail with a return receipt for proof of mailing and delivery
• Allow sufficient time for international postal delivery (which can take several weeks)
• Sign with original wet ink signature (same requirement as faxing)
• Mail to the address specified in the Form 5472 instructions for foreign-owned entities

The disadvantage of mailing is the lack of immediate confirmation and the risk of documents being lost in transit, especially from international locations.

Key Compliance Reminders

• File Form 5472 with your pro forma Form 1120 by the due date (April 15 for calendar-year entities, or October 15 with extension). See our other blog posts regarding how to file an extension for Form 5472.
• E-filing is not available for foreign-owned disregarded entities—you must mail or fax
• When faxing, always use an original wet-ink signature. This is a MUST.
• Maintain detailed records of all reportable transactions throughout the year
• Consider professional help to ensure proper completion and timely filing like MyFreeTaxAmerica.com

The Future of Form 5472 Filing

The IRS continues to modernize its systems, and filing requirements may evolve. Foreign owners should regularly check the IRS Form 5472 instructions for any updates regarding electronic filing availability or signature requirements. However, as of now, paper filing with wet ink signatures remains the only accepted method.

Conclusion

The combination of no e-filing option and the wet-ink signature requirement for faxed returns makes Form 5472 compliance particularly challenging for foreign owners of US disregarded entities. With penalties starting at $25,000, understanding and following these requirements is essential.

Whether you choose to fax with an original signature or mail your return, the key is planning to ensure timely filing. Review the official IRS Form 5472 instructions for complete requirements, or consult a tax professional experienced in international tax matters to navigate these compliance obligations successfully.

Disclaimer: This article is for informational purposes only and does not constitute tax, legal, or professional advice. The information provided is general in nature and may not apply to your specific situation. Tax laws and IRS requirements are subject to change. You should consult with a qualified tax professional or attorney regarding your specific circumstances and compliance obligations.