Annual report filing for NRIs

For Non-Resident Indians (NRIs) owning businesses in the United States, understanding and complying with federal and state reporting obligations is crucial. Federally, foreign-owned U.S. reporting corporations and certain foreign-owned disregarded entities must file IRS Form 5472 to report transactions with related parties, often accompanied by a pro forma Form 1120.

Penalties for non-filing are substantial. NRIs also need an Employer Identification Number (EIN) for their U.S. entity, and individuals may require an Individual Taxpayer Identification Number (ITIN) for tax filings.

Additionally, NRI individuals should review thresholds for FBAR (FinCEN Form 114) and FATCA (Form 8938) reporting for foreign financial accounts. Recent changes to Beneficial Ownership Information (BOI) reporting under the Corporate Transparency Act by FinCEN (interim final rule March 26, 2025) exempt entities created in the U.S. from BOI reporting.

However, foreign-formed entities that register to do business in the U.S. are considered 'foreign reporting companies' and must file BOI reports. Those registered before March 26, 2025, must file by April 25, 2025, while entities registered on or after March 26, 2025, have 30 days from their registration effective date.

State-level annual reporting and franchise taxes vary significantly. In Delaware, corporations must file an Annual Report and pay franchise tax by March 1, with penalties for late filing and unpaid taxes.

Limited Partnerships and Limited Liability Companies in Delaware pay an annual tax of $300 by June 1, with a $200 penalty for late payment plus interest. Texas imposes a franchise tax on entities formed or doing business in the state, with the annual report due May 15.

States use various terms like 'Annual Report,' 'Statement of Information,' or 'Annual List,' and deadlines, fees, and penalties differ widely, often leading to administrative dissolution for non-compliance.

Common state requirements include maintaining a registered agent, updating entity information, and paying franchise taxes or minimum fees regardless of taxable income. Sales tax nexus is a separate obligation, where economic thresholds can necessitate registration and collection even without a physical presence.

A practical compliance checklist for NRIs includes: confirming the entity type and formation state to identify specific annual report and franchise tax rules and deadlines; obtaining and maintaining an active EIN for the entity and an ITIN for individuals if required; determining if the U.S. entity is foreign-owned and if Form 5472/pro forma 1120 applies, preparing for its filing due to significant penalties; reviewing BOI/CTA applicability based on FinCEN’s updated rule and filing if necessary within the prescribed window; maintaining a registered agent and calendaring all state and federal filing deadlines; and tracking sales activity to assess potential state sales-tax nexus.

For Non-Resident Indians (NRIs) owning businesses in the United States, understanding and complying with federal and state reporting obligations is crucial. Federally, foreign-owned U.S. reporting corporations and certain foreign-owned disregarded entities must file IRS Form 5472 to report transactions with related parties, often accompanied by a pro forma Form 1120.

Penalties for non-filing are substantial. NRIs also need an Employer Identification Number (EIN) for their U.S. entity, and individuals may require an Individual Taxpayer Identification Number (ITIN) for tax filings.

Additionally, NRI individuals should review thresholds for FBAR (FinCEN Form 114) and FATCA (Form 8938) reporting for foreign financial accounts. Recent changes to Beneficial Ownership Information (BOI) reporting under the Corporate Transparency Act by FinCEN (interim final rule March 26, 2025) exempt entities created in the U.S. from BOI reporting.

However, foreign-formed entities that register to do business in the U.S. are considered 'foreign reporting companies' and must file BOI reports. Those registered before March 26, 2025, must file by April 25, 2025, while entities registered on or after March 26, 2025, have 30 days from their registration effective date.

State-level annual reporting and franchise taxes vary significantly. In Delaware, corporations must file an Annual Report and pay franchise tax by March 1, with penalties for late filing and unpaid taxes.

Limited Partnerships and Limited Liability Companies in Delaware pay an annual tax of $300 by June 1, with a $200 penalty for late payment plus interest. Texas imposes a franchise tax on entities formed or doing business in the state, with the annual report due May 15.

States use various terms like 'Annual Report,' 'Statement of Information,' or 'Annual List,' and deadlines, fees, and penalties differ widely, often leading to administrative dissolution for non-compliance.

Common state requirements include maintaining a registered agent, updating entity information, and paying franchise taxes or minimum fees regardless of taxable income. Sales tax nexus is a separate obligation, where economic thresholds can necessitate registration and collection even without a physical presence.

A practical compliance checklist for NRIs includes: confirming the entity type and formation state to identify specific annual report and franchise tax rules and deadlines; obtaining and maintaining an active EIN for the entity and an ITIN for individuals if required; determining if the U.S. entity is foreign-owned and if Form 5472/pro forma 1120 applies, preparing for its filing due to significant penalties; reviewing BOI/CTA applicability based on FinCEN’s updated rule and filing if necessary within the prescribed window; maintaining a registered agent and calendaring all state and federal filing deadlines; and tracking sales activity to assess potential state sales-tax nexus.