Does the IRS Have an Official Exchange Rate? (Form 5472)

No. The IRS states that it "has no official exchange rate" and that it generally accepts any posted exchange rate that is used consistently. For Form 5472, amounts are reported in US dollars with an attached schedule of the rates used, so the practical decision is which posted source you cite, and then sticking with it.

Foreign owners meet three different euro rates in the same week: the one their bank applied, the one a search engine shows, and the one in an IRS table. All three are "real". The question for Form 5472 is not which one is official, because none is, but which one you can document and apply the same way every year.

The IRS yearly average currency exchange rates page, last updated on 17 September 2026, lists 2025 averages of 0.886 euros and 0.759 pounds per US dollar, among 39 currencies. Our free IRS yearly average exchange rates tool shows the full 2021–2025 table with a converter. Once the numbers are ready, you can start your Form 5472 filing and we will prepare the package with the exchange-rate schedule attached.

What does the IRS actually say about exchange rates?

The IRS says there is no official rate and that consistency is what it looks for. The yearly average page states: "The Internal Revenue Service has no official exchange rate. Generally, it accepts any posted exchange rate that is used consistently."

The same page sets out the general rule for translating items: "In general, use the exchange rate prevailing (i.e., the spot rate) when you receive, pay or accrue the item." For a country with more than one exchange rate, it says to "use the rate that applies to your specific facts and circumstances." It also notes that these rates do not apply to paying US tax, which must be remitted in US dollars.

Form 5472 adds a documentation rule rather than a rate rule. The Instructions for Form 5472 say, for Part IV: "State all amounts in U.S. dollars and attach a schedule showing the exchange rates used." The regulation behind the form, Treas. Reg. § 1.6038A-2(c), says amounts "must be expressed in United States currency, with a statement of the exchange rates used". Neither names a required source.

Which posted exchange-rate sources can a foreign-owned LLC use?

The IRS foreign currency and currency exchange rates page lists government resources, namely the Treasury Department's rates, the Federal Reserve and the US Department of Agriculture, and two external resources, Oanda and XE. For a foreign-owned LLC, four sources come up most often.

Treasury describes its dataset as "the U.S. government's authoritative exchange rates to ensure consistency for foreign currency units and U.S. dollar equivalents across all reporting done by agencies of the government." Its Fiscal Data page shows the table released quarterly. For the quarter ending 31 December 2025, the Treasury table listed 167 currencies, including the Philippine peso and Nigerian naira, neither of which appears in the IRS table.

The Federal Reserve's G.5A annual release says its averages "are based on daily noon buying rates for cable transfers in New York City certified for customs purposes by the Federal Reserve Bank of New York." It covers far fewer currencies than Treasury.

Why do different sources give different dollar amounts?

Different sources measure different things: an average across a year, a rate on a single date, or the rate one bank charged. The worked example below converts the same €20,000 capital contribution made during 2025 four ways.

The two annual averages, from the IRS and the Federal Reserve, differ by only $38.64. The two quarter-end rates from the same Treasury table differ by $1,856.74, because the euro strengthened against the dollar during 2025. The lesson is not that one number is right. It is that a point-in-time rate and a yearly average answer different questions, and the schedule should say which one you used.

For a currency that moved less, the gap nearly disappears. ₹500,000 converts to $5,738.35 at the IRS 2025 average of 87.133 rupees per dollar, and to $5,737.45 at the Federal Reserve's 87.1468, a difference of 90 cents.

Direction matters as much as source. Dividing €20,000 by 0.886 gives $22,573.36; multiplying by 0.886 by mistake gives $17,720.00, which is wrong by almost $4,900. The IRS page gives the rule for its own table: "divide the foreign currency amount by the applicable yearly average exchange rate."

Which rate should you use for Form 5472?

Use a posted rate you can cite, applied the same way to similar transactions, and keep it from year to year. The IRS gives a general spot-rate rule and accepts any posted rate used consistently; it does not choose between sources for you.

A practical way to frame the choice, not a rule from the IRS:

• One large transfer on a known date. A dated rate for that day, from the Federal Reserve's daily H.10 series or the rate your bank applied, ties the number to the event.
• Many small amounts in one currency across the year. A single yearly average from one publisher, applied to every one of them, keeps the schedule simple and consistent.
• A currency the IRS table does not list. Use another posted source that does list it, such as the Treasury table, and name it.
• A country with more than one official rate. Follow the IRS instruction to use the rate that applies to your facts.

Our Form 5472 exchange rates guide goes further into spot rates versus yearly averages for contributions, withdrawals and loans.

Are there mistakes in the IRS yearly average table?

Yes, two, both typing errors in otherwise complete rows. On the IRS page as retrieved on 30 September 2026, the Euro Zone rate for 2024 is printed as "0,924", with a comma, and the Russia rate for 2021 as ".73.686", with a stray leading full stop.

The neighbouring years make the intended values clear: 0.924 for the euro in 2024 and 73.686 for the ruble in 2021. Our exchange-rate tool shows the corrected values and footnotes the published text, so the difference is visible rather than hidden. If you paste the IRS table into a spreadsheet, check those two cells, because a comma or a double full stop can turn a rate into text or a wrong number.

The IRS table is also limited in reach. It has no row for the Philippine peso, Nigerian naira, Pakistani rupee, Indonesian rupiah or Vietnamese dong, and the IRS page points to other posted rates for currencies not listed.

How do you document the exchange-rate source for Form 5472?

A good schedule lets anyone reproduce each dollar figure without asking you. These steps produce one:

1. Choose one source per currency. Write down the reason in a sentence, for example "one yearly average for monthly transfers".
2. Record the source exactly. Note the publisher, the page URL and the date you retrieved it.
3. Record the rate as published, with its direction. Mark whether it is foreign currency per dollar or dollars per unit of foreign currency.
4. Convert each transaction. Divide when the rate is foreign currency per dollar; multiply when it is dollars per unit.
5. Round the same way every time. Round each converted amount to the cent, then total.
6. List every transaction in the schedule. Give the date, original amount and currency, rate, source and US-dollar result.
7. Save a copy of the source page. The IRS page currently shows only 2021 to 2025, so keep a PDF or screenshot of the rate you used.
8. Reuse the source next year. If you change source, say so in the schedule and give the reason.

Four owners, four rate choices

1. The Indian consultant with monthly transfers. She moves rupees into the LLC twelve times in 2025. She applies the IRS 2025 average of 87.133 to all twelve, lists them in twelve rows, and cites the IRS page and retrieval date once at the top.

2. The German founder with one large contribution. He funds the LLC with a single euro transfer. He cites the rate his bank applied that day, with the bank confirmation attached to his workpapers, and uses the same method for the one withdrawal later in the year.

3. The Philippine seller. The peso is not in the IRS table. She cites the Treasury Reporting Rates of Exchange, names the table and date, and applies the same table for every peso amount.

4. The owner who wants to switch. He used the IRS table for 2024 and prefers his bank's rates for 2025. He documents the change: the schedule states the new source and why. What he avoids is choosing a different source for each transaction depending on which gives the lower total.

How does Form5472 Prep handle currency conversion?

We work from your original-currency records. We convert each reportable transaction using a documented source, attach the exchange-rate schedule the instructions require, and prepare the pro forma Form 1120, Form 5472 and Part V statement. We then fax the package to the IRS Ogden PIN Unit with a timestamped transmission receipt. Every filing is reviewed by a qualified accountant before it is submitted.

• Standard: $149, ready in 5–7 business days
• Express: $199, within 3 business days
• Each additional past tax year: +$99
• IRS fax delivery: included

We are not a CPA firm and do not give tax advice. See pricing or start your filing.

Frequently asked questions

Does the IRS have an official exchange rate?

No. The IRS yearly average rates page says "The Internal Revenue Service has no official exchange rate" and that it generally accepts any posted exchange rate that is used consistently.

Can I use the IRS yearly average rate for Form 5472?

Generally, yes. It is a posted rate the IRS publishes, and the IRS accepts posted rates used consistently. Form 5472 requires US-dollar amounts with an attached schedule of the rates used; it does not require one specific source.

How do I convert using the IRS yearly average table?

Divide the foreign-currency amount by the rate, because the table quotes foreign currency per US dollar. €10,000 at the 2025 euro rate of 0.886 is €10,000 ÷ 0.886 = $11,286.68.

What if my currency is not in the IRS table?

The IRS page says to use other posted rates, such as those on its foreign currency page. Treasury's quarterly table lists far more currencies, including the Philippine peso and Nigerian naira. Name the source in your schedule.

Can I use my bank's exchange rate instead?

Yes, if you apply it consistently and can document it. The IRS foreign currency page says you can generally get exchange rates from banks, and the IRS accepts posted rates used consistently. Keep the bank confirmations showing each rate.

Does Form 5472 need an exchange-rate schedule?

Yes. The Form 5472 instructions say to state all amounts in US dollars and attach a schedule showing the exchange rates used. Treas. Reg. § 1.6038A-2(c) requires a statement of the exchange rates used.

Are the IRS yearly average rates the same as the Federal Reserve's?

They are close but not identical. For 2025 the IRS lists 0.886 euros per dollar and the Federal Reserve's G.5A average is $1.1306 per euro. Converting €20,000 gives $22,573.36 and $22,612.00 respectively.

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There is no official IRS exchange rate, only posted rates and a requirement to show your work. Pick a source you can cite, apply it consistently, and attach the schedule. Start your Form 5472 filing and we will build the schedule from your records, or read our Form 5472 exchange rates guide for the spot-rate questions.

Educational content only; not tax or legal advice.