I'm dealing with almost the exact same situation! Foreign-owned Wyoming LLC, missed the 2022 Form 5472 filing because I had no idea about the registered agent fee being reportable. After reading through all these responses, I'm definitely going with Option 2 - filing both years. The consensus seems pretty clear that ignoring 2022 is way too risky given the $25,000 penalty. What's really helpful from this thread is understanding that I need to document WHEN I discovered the requirement and show I acted quickly once I learned about it. I'm going to start gathering all my emails and research from when I first found out about Form 5472 to include with my reasonable cause statement. Quick question for those who've been through this - how detailed should the reasonable cause letter be? Should I include the specific date I learned about the requirement, or just a general timeline? And do I need to attach any supporting documentation beyond the letter itself? Thanks everyone for sharing your experiences. This thread has been way more helpful than the generic advice I was getting from other sources!

I've been through this exact scenario with my foreign-owned LLC and can confirm that filing both years is absolutely the right call. The $25,000 penalty per missed form is not something the IRS takes lightly, and enforcement has definitely ramped up in recent years. A few practical tips from my experience: 1. When preparing your reasonable cause statement, focus on the fact that you weren't aware of the requirement rather than trying to argue the registered agent fee shouldn't be reportable (it definitely is). 2. Include specific dates - when you formed the LLC, when you first learned about Form 5472, when you started taking corrective action. Documentation is key. 3. Consider having a tax professional review your forms before filing, especially for the 2022 late filing. The penalty is steep enough that it's worth the extra cost to get it right. 4. File the 2022 form as soon as possible. The longer you wait, the harder it becomes to argue reasonable cause. The good news is that many people have successfully avoided penalties with proper documentation and a well-crafted reasonable cause statement. Don't let anyone convince you to just ignore the missed year - that's playing with fire given the penalty amount.

Since nobody mentioned this yet - you should seriously consider whether your LLC is being treated as a corporation or disregarded entity for US tax purposes. If you never filed Form 8832 to elect corporate treatment, a single-member foreign-owned LLC is by default treated as a disregarded entity. This distinction matters because filing requirements are different. A disregarded entity owned by a foreign person still needs to file Form 5472, but attached to a pro forma Form 1120 (not a full tax return). Understanding this might help you file the correct forms now.

I went through almost the exact same situation with my Delaware LLC that I abandoned after formation. The stress and panic you're feeling is completely understandable, but there is hope! Here's what I learned from my experience: Yes, you do need to file Form 5472 and a pro forma Form 1120 for each year, even with zero activity. The key is acting quickly now and putting together a strong reasonable cause statement. For your reasonable cause letter, emphasize these points: 1) You're a non-US resident who was genuinely unaware of the filing requirements, 2) The LLC had absolutely no business activity or transactions, 3) You're coming forward voluntarily to correct the situation, and 4) This was an honest mistake, not willful non-compliance. I filed my delinquent returns with detailed reasonable cause statements and requested penalty abatement. While I can't guarantee your outcome will be the same, the IRS did accept my reasonable cause and waived most of the penalties. The fact that your LLC truly had no activity works strongly in your favor. Don't let the $25,000 penalty amount scare you into paralysis - that's the maximum statutory penalty, but the IRS has discretion to reduce or waive penalties when there's reasonable cause. Get those returns filed ASAP with solid documentation of your circumstances.

One thing nobody has mentioned yet - be careful about timing your distributions around tax time. I made the mistake of taking a large distribution in early January after a profitable December, but my accountant pointed out it would have been much better to take it in December of the previous tax year because of how it affected my basis calculations. Definitely talk to your CPA about the timing of larger distributions. The actual transfer is simple, but the tax implications can get complex depending on your specific situation and the profitability of your S corp in a given year.

Just want to add my perspective as someone who's been through this learning curve! You're absolutely right that the actual distribution is just a simple bank transfer, but I'd emphasize getting your documentation system set up right from the start. I use a simple Google Sheet to track all my distributions with columns for date, amount, running total, and notes about what triggered the distribution (quarterly profit-sharing, year-end bonus to myself, etc.). This makes it super easy to provide a clean summary to my accountant at tax time. One mistake I made early on was not coordinating with my accountant about distribution timing. Now I send a quick email before any distribution over $10K just to make sure there aren't any tax implications I'm missing. Takes 5 minutes and has saved me headaches. The fact that you're asking these questions upfront shows you're being smart about it. The mechanics are simple, but the tax planning around distributions can get nuanced, especially as your business grows.

Has anyone used a third-party service to help with the ERO application? I'm in a similar boat and wondering if it's worth hiring someone or if I should just apply directly.

I actually went through this exact situation about 2 years ago with a DUI from 6 years prior. I was terrified that it would prevent me from getting ERO status, but it turned out to be much less of an issue than I expected. The key things that helped me were: 1) Being completely honest on Form 8633 - I disclosed everything upfront, 2) Including a brief letter explaining the circumstances and what I learned from the experience, and 3) Emphasizing my clean record and professional conduct since then. My application was approved without any follow-up questions. The IRS seems much more concerned with recent issues or patterns of behavior rather than isolated incidents from several years ago. Your 9 years of experience as a tax preparer with an active PTIN actually works strongly in your favor - it shows you've been trusted with tax preparation responsibilities and maintained good standing. Don't let the DUI stop you from pursuing your business goals. Just be honest, provide complete information, and let your professional track record speak for itself.

Has anyone here actually LOST money despite using a relocation company for their home sale? I'm concerned because my house value has dropped about 5% since I bought it 2 years ago. Will the relocation company offer me fair market value or am I going to take a bath on this?

Great question! I went through a similar relocation buyout program about 18 months ago and it was actually quite beneficial tax-wise. One key thing to understand is that the relocation company purchase often allows you to avoid the typical selling costs (realtor commissions, staging, repairs, etc.) that would normally reduce your net proceeds from a sale. The tax treatment depends on how your employer structures the program. In many cases, the relocation company will purchase your home at fair market value (based on professional appraisals), and any difference between what you paid and what they pay you is still subject to the normal capital gains rules. However, the additional benefits they provide - like covering closing costs, temporary housing, moving expenses - may be treated as non-taxable relocation benefits up to certain limits. Make sure to ask your HR department for documentation on exactly how each component will be reported on your W-2. Some portions might be taxable compensation while others qualify as tax-free moving expense reimbursements. The key is getting clarity upfront so you can plan accordingly!