This form is to be used by a foreign corporation that has income that is "effectively connected" with a U.S. trade or business. Generally, that means any foreign corporation that has an employee, office, warehouse or production facility in the U.S..
The information required is substantially similar to that required on a domestic corporation income tax return (Form 1120), except that allocations may be required of U.S. source and foreign source income and any related expenses or taxes.
For a foreign corporation with an office or place of business in the U.S., the filing date is the 15th of March. A six month automatic extension of time to file the return (but not to pay any tax due) may be requested on Form 7004. For a foreign corporation that does not have an office or fixed place of business in the U.S., the form must be filed by 15th of June, but a six month extension of time to file may be requested with Form 7004.
File with the Internal Revenue Service Center, Philadelphia, PA 19255
The IRS instructions state that the average time to prepare this form is 77.5 hours. That doesn't include the time required to learn about the law or to accumulate the required records. In most respects, it's the same as the preparation of a domestic corporation income tax return on Form 1120, except that allocations may be required between U.S. source income and expenses and foreign source.
The penalties are the same as for a failure to file a U.S. corporation tax return.
A foreign corporation that does not have an office or place of business in the U.S. but which does have some U.S. source income should seek assistance from a U.S. tax preparer who is familiar with the rules for this form.
The form is not required if the corporation did not engage in any trade or business within the US and if all of its US source income was subject to withholding at the source.
It does not matter if the foreign corporation is owned by non US persons or by US persons or some combination. If the corporation is domiciled in a country other than the US, it will be a foreign corporation. It may be possible for a foreign person to own a corporation that is domiciled in the US -- in which case the foreign owner would be required to file a Form 5472 .
If a foreign corporation is controlled by U.S. shareholders, those shareholders may be required to file a Form 5471 .