New Mexico is the most hands-off state for LLC ownership in the United States. No annual report. No franchise tax. No state income tax on out-of-state LLCs. No public disclosure of members. It’s the state that asks the least of you — which is exactly why foreign founders choose it. But the IRS doesn’t care which state you picked. Form 5472 is still required, and the $25,000 penalty applies.
A foreign owned LLC form 5472 is still required here, and foreign owned LLC tax filing often needs a form 5472 CPA even though New Mexico LLC compliance is lighter than other states.
**Short Answer:** New Mexico is popular because it has no annual report and strong privacy, but foreign-owned LLCs still face IRS filing duties. The state is simple, yet the federal Form 5472 requirement remains fully in force.
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Why New Mexico LLC compliance feels easy but federal filing is not
| Benefit | Details | How It Compares |
| No annual report | Zero state filings after formation — ever | Wyoming requires annual report ($60); Delaware requires franchise tax ($300) |
| No franchise tax | $0 annual state fees | Delaware charges $300/year (LLC) |
| No state income tax (non-residents) | Out-of-state LLCs with no NM-sourced income owe nothing | Same as Wyoming and Delaware |
| Maximum privacy | Members and managers not listed on Articles of Organization | Same as Wyoming; stronger than many states |
| Lowest ongoing cost | $0/year in state fees (only registered agent cost) | Wyoming: $60/year; Delaware: $300+/year |
| No publication requirement | Unlike Arizona/New York, no newspaper notice needed | Saves $100-500 vs states with this rule |
| No operating agreement filing | Operating agreement stays private — never filed with state | Standard across most states |
| Formation cost | $50 filing fee | Cheapest major formation state |
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New Mexico vs Wyoming vs Delaware: The True Cost of “Free”
| Cost Component (Annual) | New Mexico | Wyoming | Delaware |
| Annual report / state filing | $0 | $60 | $0 (but franchise tax replaces it) |
| Franchise tax | $0 | $0 | $300 |
| State income tax (no NM income) | $0 | $0 | $0 |
| Registered agent | $100-150 | $100-150 | $100-200 |
| Form 5472 CPA (federal) | $300-800 | $300-800 | $300-800 |
| **Total annual compliance** | **$400-950** | **$460-1,010** | **$700-1,300** |
| **5-Year total** | **$2,000-4,750** | **$2,300-5,050** | **$3,500-6,500** |
New Mexico saves $60-350/year vs other popular states purely on state fees. Over 5 years, that’s $300-1,750 in savings.
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The “Set It and Forget It” Trap
New Mexico’s zero-report structure creates a dangerous psychological effect: foreign owners form the LLC, set up a bank account, and then forget about it. No annual report means no annual reminder from the state. No franchise tax means no annual bill. The LLC just… exists silently.
This is exactly how $25,000+ penalties accumulate.
| Year | State Asks of You | IRS Asks of You | What Happens If You Ignore IRS |
| Year 1 | Nothing | Form 5472 + Pro Forma 1120 | $25,000 penalty accruing |
| Year 2 | Nothing | Form 5472 + Pro Forma 1120 | $50,000 cumulative exposure |
| Year 3 | Nothing | Form 5472 + Pro Forma 1120 | $75,000 cumulative exposure |
| Year 4 | Nothing | Form 5472 + Pro Forma 1120 | $100,000 cumulative exposure |
| Year 5 | Nothing — LLC still in good standing | CP15 notice arrives | Shock. Panic. Call a CPA. |
The state silence is NOT confirmation that you’re compliant. New Mexico will never warn you about IRS obligations — that’s not their job.
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Federal Tax Filing Requirements (Same as Every State)
| Requirement | Details |
| Form 5472 | Required for all foreign-owned US LLCs — regardless of state |
| Pro Forma Form 1120 | Filed as the host return alongside Form 5472 |
| Deadline | April 15 (extension to October 15 via Form 7004) |
| Penalty | $25,000 per form, per year |
| Triggered by | Any reportable transaction between LLC and foreign owner |
| Common reportable transactions | Capital contributions, bank deposits, loans, expense payments, distributions |
| EIN required | Yes — apply via Form SS-4 (mail/fax for foreign owners without SSN) |
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New Mexico State-Specific Compliance
| Obligation | Requirement | Due Date | Cost |
| Articles of Organization | File once at formation | Formation only | $50 |
| Annual report | NOT REQUIRED | Never | $0 |
| Franchise tax | NOT REQUIRED | Never | $0 |
| Registered agent | Required — must maintain at all times | Ongoing | $100-150/year |
| State income tax return | Only if NM-sourced income | April 15 (if applicable) | Varies |
| Gross receipts tax (GRT) | Only if conducting business IN New Mexico | Monthly/quarterly | Varies by county |
| CRS-1 registration | Only if selling goods/services in NM | Before first sale in NM | $0 |
For most foreign owners with no New Mexico operations: Your only ongoing state obligation is maintaining a registered agent. That’s it. Everything else is federal.
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Who Should Choose New Mexico
| Ideal Profile | Why NM Works | Better Alternative If… |
| Solo freelancer / consultant | Lowest possible cost, zero state admin | You need VC funding → Delaware C-Corp |
| Dormant LLC for banking access | No annual report means no risk of dissolution from missed filings | You need Court of Chancery → Delaware |
| Privacy-maximizing owner | Members never disclosed publicly | You want asset protection charging orders → Wyoming |
| Budget-conscious founder | $0 state fees saves $60-300/year vs alternatives | You have complex multi-entity structure → Delaware |
| E-commerce seller (no NM inventory) | Zero state obligations beyond registered agent | You have NM warehouse/inventory → must pay GRT |
| Backup/holding LLC | Exists to hold assets or contracts, minimal activity | You need investor confidence → Delaware |
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New Mexico Gross Receipts Tax (Important Exception)
If your LLC conducts business WITHIN New Mexico (not just being registered there), you may owe Gross Receipts Tax:
| Factor | Details |
| What it is | New Mexico’s equivalent of sales tax — but charged on the seller, not buyer |
| Rate | 5.0% — 9.3% depending on location within NM |
| Who owes it | LLCs performing services or selling goods within New Mexico |
| Who does NOT owe it | LLCs registered in NM but operating entirely outside the state |
| Foreign owner impact | If you’re overseas and your LLC serves non-NM clients: $0 GRT owed |
| Registration | CRS-1 form required before first NM sale |
Most foreign-owned NM LLCs owe zero GRT because they operate entirely outside New Mexico. You registered in NM for privacy and cost — not because you have NM customers.
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Compliance Calendar for New Mexico Foreign-Owned LLCs
| Deadline | Obligation | Filed With | Cost/Penalty |
| April 15 | Form 5472 + Pro Forma 1120 (or extension) | IRS | $25,000 penalty if missed |
| October 15 | Extended deadline for Form 5472 | IRS | $25,000 penalty if missed |
| April 15 | FBAR (if US bank > $10,000) | FinCEN | $12,906/account |
| Ongoing | Maintain registered agent | NM Secretary of State | LLC may be revoked |
| N/A | Annual report | Not required | $0 |
| N/A | Franchise tax | Not required | $0 |
Your calendar has only 2-3 real deadlines — all federal. New Mexico itself requires nothing annually.
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How OptimizeTax Helps New Mexico LLC Owners
| Challenge | How We Help |
| No state reminders about federal deadlines | We send you Form 5472 filing reminders proactively |
| “Forgot I had an LLC” syndrome | Annual check-in ensures you’re not accumulating penalties silently |
| Multiple years unfiled | DIIRSP catch-up filings with penalty abatement requests |
| Unsure if GRT applies | We assess whether your activities trigger NM Gross Receipts Tax |
| Need EIN or ITIN | CAA designation for passport-free ITIN; SS-4 assistance for EIN |
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Authoritative Sources
- [IRS Form 5472 Instructions](https://www.irs.gov/forms-pubs/about-form-5472)
- [IRS Form 1120 Information](https://www.irs.gov/forms-pubs/about-form-1120)
- [IRS FBAR Requirements](https://www.irs.gov/businesses/small-businesses-self-employed/report-of-foreign-bank-financial-accounts-fbar)
- [New Mexico Secretary of State – Business Services](https://www.sos.nm.gov/business-services/)
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Frequently Asked Questions
Does New Mexico require an annual report for LLCs?
No. New Mexico is one of the only states that does not require any annual report or periodic filing for LLCs. Once formed, your LLC remains active indefinitely as long as you maintain a registered agent.
My New Mexico LLC has had zero activity for 3 years. Am I still in good standing?
Yes — with New Mexico. The state considers you in good standing as long as your registered agent is active. However, you may owe 3 years of Form 5472 to the IRS ($75,000 penalty exposure) regardless of state standing.
Why would I choose New Mexico over Wyoming?
Cost: New Mexico saves $60/year (no annual report fee). Simplicity: zero state filings ever. The tradeoff is Wyoming has slightly stronger asset protection (charging order) and more established LLC case law.
Does “no annual report” mean no annual obligations at all?
No. It means no obligations to the STATE of New Mexico. Your FEDERAL obligations (Form 5472, FBAR) remain unchanged. The IRS operates independently of state filing requirements.
Is New Mexico a good choice for Amazon FBA sellers?
Yes, if you have no inventory or operations in New Mexico. If you store inventory in an NM warehouse, Gross Receipts Tax may apply. For most foreign FBA sellers using Amazon’s non-NM warehouses, New Mexico works perfectly.
Does a foreign owned LLC form 5472 still apply in New Mexico?
Yes. A foreign owned LLC form 5472 filing still applies even though New Mexico has no annual report for LLCs.
When should I hire a form 5472 CPA for foreign owned LLC tax filing and New Mexico LLC compliance?
You should hire a form 5472 CPA as soon as the LLC is funded, opened a bank account, or had owner transactions that must be documented correctly.
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