Wyoming vs Delaware LLC: the filing is the same

Why the state doesn’t change the federal rule

An LLC is a creature of state law. The IRS says so itself: an LLC “is a business structure allowed by state statute,” and each state may use different regulations (IRS, LLC).

How the IRS taxes it is a separate, federal question, and the answer doesn’t depend on the state. A single-member LLC that hasn’t elected otherwise is a disregarded entity (IRS, single member LLCs). The Form 5472 rule then applies to “a domestic DE that is wholly owned by a foreign person” (Form 5472 instructions). Domestic means formed in the US, which includes Wyoming, Delaware and every other state. The instructions don’t mention any state by name, and nothing in them turns on where the LLC was formed.

What the federal filing looks like, in either state

• A pro forma Form 1120 with only the LLC’s name, address and items B and E on the first page filled in, and “Foreign-owned U.S. DE” written across the top.
• Form 5472 attached, reporting the money that moved between you and the LLC during the year.
• Sent by fax or post to the dedicated IRS address in the Form 5472 instructions. It can’t be filed electronically.
• Due April 15 for a calendar-year LLC, or October 15 if Form 7004 went in by April 15.
• A $25,000 penalty for each year it isn’t filed when due.

All of that comes from the Form 5472 instructions and the Form 7004 instructions, and none of it has a Wyoming version or a Delaware version. A Wyoming LLC with no sales and a Delaware LLC with no sales are in exactly the same federal position.

What does change with the state

The state has its own list, and it runs on a separate calendar from the IRS:

• Whether the state wants an annual report, and when.
• What the state charges each year, whether it calls that a fee or a tax.
• The requirement to keep a registered agent in the state, and what happens if the agent resigns.

These differ between Wyoming and Delaware and they change from time to time, so check them with the state’s own website or with your registered agent rather than a blog post, this one included. We don’t handle state annual reports or registered agent renewals. Those stay with your agent.

Paying those state fees matters for the federal filing in one way: if you paid them from your own money, that payment can be one of the transactions the Form 5472 reports.

What does change the federal filing

What changes it is how the LLC is owned and taxed:

• How many owners it has. An LLC with at least two members is treated as a partnership by default, which is a different return altogether (IRS, LLC).
• Whether it elected to be taxed as a corporation on Form 8832. Then it files a real Form 1120, not a pro forma one (IRS, single member LLCs, Form 1120 instructions).
• Whether the owner is a US person. The foreign-owned rule only applies when the single owner is foreign.

If you’re not sure which of these applies to your LLC, the EIN letter and the formation documents are the place to start.

If you haven’t formed the LLC yet

People choose between Wyoming and Delaware for reasons like state fees or what their formation service recommended. Those are state questions, and this post isn’t advice on them. The one thing to take from it is that the federal filing won’t be the tie-breaker. Whichever state you pick, the pro forma 1120 and Form 5472 are due for the year you form it, and for most years after that.

We prepare and file that federal return for Wyoming, Delaware and other state LLCs alike, for one flat fee per year. See the Form 5472 page, or run the two minute LLC check to see which filings your LLC likely owes.