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Guide

Form 5472 Penalties Guide

The penalty for not filing Form 5472 is $25,000 per form per year. Penalties accumulate. Penalty abatement is possible for reasonable cause. IRS is aggressive on enforcement.

The IRS imposes a $25,000 penalty for each Form 5472 not filed, filed late, or filed incorrectly. This penalty applies per form, per year and can accumulate rapidly. A foreign-owned LLC that fails to file for 3 years faces $75,000+ in penalties. Penalty abatement is possible for reasonable cause but requires a formal request.

Penalties

Form 5472 Penalty Structure

| Violation | Penalty | |-----------|---------| | Failure to file | $25,000 per form per year | | Filing late | $25,000 (same as non-filing) | | Filing incorrectly | $25,000 | | Failure to maintain records | $25,000 | | Continued non-compliance | Additional $25,000 per 30-day period |

How Penalties Accumulate

| Years Not Filed | Penalty | |----------------|----------| | 1 year | $25,000 | | 2 years | $50,000 | | 3 years | $75,000 | | 5 years | $125,000 |

Abatement

Penalty Abatement

The IRS may abate Form 5472 penalties for 'reasonable cause.' Common grounds:

  1. Ignorance of filing requirement — Didn't know about Form 5472 (first-time filers)
  2. Reliance on professional — CPA or attorney failed to advise
  3. Medical emergency — Serious illness preventing filing
  4. Natural disaster — Events beyond your control

To request abatement: file a letter with the IRS explaining reasonable cause, include supporting documentation, and reference IRC Section 6038A.

Tip: File the overdue Form 5472 before requesting abatement. Showing compliance strengthens your case.

Prevention

How to Avoid Penalties

  1. Get your EIN as soon as your LLC is formed
  2. File Form 5472 by April 15 each year (or request extension)
  3. Keep records of ALL transactions between you and your LLC
  4. Hire a US CPA experienced with foreign-owned LLCs
  5. File even if your LLC had $0 in transactions

Related: Form 5472 guide | Form 5472 instructions | Form 5472 deadline

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Frequently Asked Questions

Is Form 5472 required?

Yes, for all foreign-owned US LLCs and corporations with 25%+ foreign ownership. Filed annually with a pro-forma Form 1120.

What is the penalty for not filing?

$25,000 per form per year. Penalties accumulate and the IRS is aggressive on enforcement.

When is Form 5472 due?

April 15 (same as tax return). 6-month extension available via Form 7004 (extends to October 15).

Do I need an EIN to file Form 5472?

Yes. Your EIN is required on Form 5472. Apply for an EIN at ein.so for $49 before filing.

Can I file Form 5472 myself?

Yes, but most non-residents use a US CPA ($200-500) due to the $25,000 penalty for errors.

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