Form 5472 Penalty: What It Is and How to Fix It

US$25,000 for each failure to file Form 5472 when due, and the same amount for failing to keep the required records. If the failure continues more than 90 days after the IRS sends a notice, an additional US$25,000 applies for each 30-day period, or part of one, that it continues (Form 5472 instructions). Criminal penalties may also apply in serious cases. The penalty applies even when the LLC had no income.

A late Form 5472 is a failure to file when due, so the same US$25,000 penalty can apply. The IRS may assess it when the late return is processed, even if a reasonable-cause statement is attached.

File now. If you are not under examination and the IRS has not contacted you about the missing return, the IRS delinquent international information return procedures let you file late with a reasonable-cause statement. The IRS says penalties may still be assessed under existing procedures, so be ready to answer IRS correspondence. Filing before a notice arrives is usually better than waiting.

The IRS sends penalty notices such as CP215 when it has charged a civil penalty; CP215 is used for international penalties on business accounts (IRS CP215 page, IRM 20.1.9). The notice shows the amount and a payment due date, and interest builds after that date. If the penalty is for a late or missing Form 5472, respond by the date on the notice: make sure the return has been filed, and ask for the penalty to be removed for reasonable cause with a written explanation and supporting documents.

Generally no. The IRS manual says first-time abatement does not apply to event-based filing requirements such as Form 5472 (IRM 20.1.9.5.5). There is a narrow exception where the Form 5472 penalty was charged automatically because the form was attached to a late Form 1120. In most cases relief depends on reasonable cause.

It can be considered. You explain in writing why the return was late, for example that you relied on a formation service or did not know about the requirement, what you did once you found out, and you attach supporting documents. Relief is not automatic and depends on the facts (IRS reasonable cause).

Yes. A foreign-owned single-member LLC files Form 5472 with a pro forma Form 1120, due on that return's due date including extensions. File Form 7004 by the regular due date (April 15 for a calendar year) and write "Foreign-owned U.S. DE" across the top, as the Form 5472 instructions require. The extension is generally 6 months (Form 7004 instructions). Step by step: Form 5472 extension with Form 7004.

It cannot be e-filed. The pro forma Form 1120 with Form 5472 attached is faxed to 855-887-7737 (300 DPI or higher) or mailed to Internal Revenue Service, 1973 Rulon White Blvd, M/S 6112, Attn: PIN Unit, Ogden, UT 84201, the address in the Form 5472 instructions. Keep the fax confirmation or mailing proof.

The usual three-year limit does not start running. Under section 6501(c)(8), when information required under section 6038A is not reported, the time to assess tax for the related return or period does not expire before three years after the information is finally furnished. Filing late starts that clock.

Our fee is US$425 per year for Form 5472 and the pro forma Form 1120, with the reasonable-cause statement and the BE-13 Claim (if needed) included, or US$550 per year if you also want Form 2848 and our responses to IRS letters and penalty notices, including a reasonable-cause penalty abatement request. Appeals and Tax Court are quoted separately.