Late or unfiled Form 5472: what to do next

The penalty in plain terms

Failure to file Form 5472, or filing it substantially incomplete or inaccurate, carries a penalty of $25,000 per form, per year. Because it applies per form and per tax year, several unfiled years compound rather than merge into one exposure.

If the failure continues after the IRS notifies the taxpayer, additional continuation penalties can apply for each 30-day period the failure persists.

Filing late is generally better than not filing

An unfiled information return stays unfiled indefinitely — the exposure does not quietly expire. Bringing the filings current puts the position on record and is a prerequisite for arguing about penalties at all.

Reasonable cause

The penalty is not automatically permanent. Relief may be available where the failure was due to reasonable cause and not wilful neglect. That is a facts-and-circumstances assessment based on what you knew, when, and what you did once you knew — not a checkbox. Nobody can promise an outcome in advance.

How to approach a catch-up

• Identify every tax year in which the LLC was foreign-owned and had transactions.
• Reconstruct the owner–LLC transactions for each of those years.
• Prepare a separate Form 5472 with its pro forma Form 1120 for each year — they are not combined.
• Keep a clear record of when and why the failure occurred, and of the filings made.
• Get the current year filed on time so the problem stops growing.

A note on who prepares the filing

A filing that nobody professional stands behind leaves you on your own if the IRS asks questions. Every package we prepare is reviewed by a US tax professional, and our paid preparer information, including our PTIN, is included on the pro forma Form 1120 where applicable.

This article is general information, not legal or tax advice for your specific situation.