The New 1% Remittance Tax 2026: Impact on Foreign LLC Owners

The remittance tax is one of the cross-border measures in the latest round of US tax legislation. It targets outbound transfers — money leaving the US financial system for a recipient abroad. Foreign LLC owners feel it most when they pull profits out of a US LLC to themselves or to a related entity in their home country. How it applies depends on the type and channel of the transfer. For the broader legislative picture, see OBBBA 2026 tax changes.

This is the single most important clarification for foreign LLC owners. The remittance tax is a tax on movement of money; Form 5472 is an information return about related-party transactions. They operate in entirely different lanes. Nothing about the remittance tax exempts you from filing Form 5472, and filing Form 5472 does not settle any remittance-tax liability. The statute behind Form 5472 — IRC §6038A — is untouched, as explained in IRC §6038A and the 2026 changes guide.

When you move money from your foreign-owned US LLC to yourself in another country, two different systems can attach to that single transfer. The remittance tax may apply to the outbound movement. Separately, the distribution is a reportable transaction between the LLC and its foreign owner that must appear on Form 5472. One does not cancel the other. Because distributions are reportable, and because funding the LLC in the first place is also reportable, virtually every foreign-owned SMLLC has a reportable transaction every year — so almost all must file.

The full set of movements that count as reportable — contributions, distributions, loans, owner-paid expenses — is on the reportable transactions list.

Some owners assume that a new tax on their transfers somehow softens or replaces the older information-return penalty. It does not. The Form 5472 penalty remains exactly as severe: $25,000 per form per year with no maximum, no statute of limitations under IRC §6501(c)(8), and an additional $25,000 for every 30 days after a 90-day IRS notice. Paying a remittance tax on a distribution does nothing to satisfy the Form 5472 filing duty for that same distribution. The full penalty mechanics are on the Form 5472 penalty page.

It is easy to conflate three separate regimes: beneficial-ownership reporting (FinCEN), the new remittance tax, and Form 5472 (IRS). They are run by different authorities under different rules. The BOI exemption for US-formed entities comes from FinCEN’s March 2025 interim final rule and is unaffected by the remittance tax or by anything in the Form 5472 world. Your IRS Form 5472 obligation stands entirely on its own and is still required every year you have a reportable transaction.

The compliance steps are the same as they have always been, regardless of the new remittance tax. Identify your reportable transactions for the year, prepare the pro forma Form 1120 as a cover sheet, attach the completed Form 5472, and send it by one of the two accepted methods — keeping your certified-mail receipt or fax confirmation as proof.

For the capital side of the ledger — the contributions that fund the LLC — see capital contribution Form 5472.

DIY filing is free but unforgiving — the $25,000 penalty applies even to an honest mistake or a missed deadline, and a foreign owner abroad cannot easily fix a rejected mailing in time. For a flat $299, form5472.tax prepares, reviews, and files your Form 5472 with the pro forma 1120, far below the $547 at form5472.online and the $999–$1,499/year compliance bundles. Compare on the pricing page or start on the apply page. We prepare and file correctly and on time; we do not offer penalty-abatement or IRS representation.