Is the $25,000 penalty per LLC or per year?

Both. It's $25,000 per Form 5472 you should have filed — and each LLC files one form per tax year. If you own 2 LLCs and missed 3 years on each, that's 6 forms × $25,000 = $150,000.

Will the IRS waive the penalty automatically?

No. You must affirmatively request abatement with a Reasonable Cause Statement filed alongside the late return. The IRS doesn't apply waivers on its own.

Has the IRS actually enforced this?

Yes. The IRS has automated penalty assessment for Form 5472 since 2018. Thousands of foreign LLC owners have received $25,000+ CP-15 notices in the mail. It is not a paper-tiger penalty.

If I file under DIIRSP, am I guaranteed the penalty is waived?

No, DIIRSP is a request, not a guarantee. That said, well-documented first-time late filings are typically accepted — the IRS published the procedure specifically to encourage voluntary catch-up by international information return filers.

What's a CP-15 notice?

It's the IRS form letter that assesses a civil penalty. For Form 5472 it's typically titled "Notice of Penalty Charge" and shows the $25,000 amount, the tax year, and a 90-day window before continuation penalties begin. Don't ignore it.

How is the penalty different from US income tax?

Totally different. Most foreign-owned single-member LLCs owe $0 in US federal income tax (their income is foreign-source). The $25,000 is an information-return penalty under IRC § 6038A — not a tax bill. It's punishment for not filing the disclosure, regardless of whether tax is owed.

If I file an extension, does that delay the penalty risk?

Yes. Filing Form 7004 by April 15 extends both the 1120 and the attached Form 5472 to October 15. As long as you file by the extended deadline, no penalty. Miss October 15 and you're in the same penalty position as missing April 15 without an extension.

Does the IRS apply the penalty to dormant LLCs?

Yes, if you had at least one reportable transaction. A truly dormant LLC (no bank account, zero activity) may have an argument that no filing was required — but the bar is very low. Most LLCs with even one wire to fund operations cross it.

Can I pay the penalty and skip the filing?

No. Paying a CP-15 penalty does not satisfy the filing requirement. You still owe the Form 5472 — and continuation penalties continue to stack until you actually file.

What does your service cost vs. the penalty exposure?

Our service is $199–$449 depending on tier and years. The penalty for a single missed year is $25,000 — a fraction of our service price. For multi-year catch-up packages (add $149 per additional past year), the math is even more compelling against ignoring the obligation.

For foreign-owned US single-member LLCs

The Form 5472 $25,000 Penalty Explained

Under IRC § 6038A(d), the IRS automatically assesses a $25,000 penalty per Form 5472 that is filed late, filed incompletely, or not filed at all — per year, per LLC. The penalty stacks at $25,000 per 30-day period if you don't fix it within 90 days of an IRS notice. Here's exactly how the penalty works, who it applies to, how to either avoid it entirely, and how to request abatement if you've already triggered it.

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How is the penalty calculated?#

$25,000 per Form 5472, per tax year. If you missed 3 years of filing for one LLC, that's $75,000 in automatic penalties. If you own multiple LLCs and missed all of them, multiply accordingly: 2 LLCs × 3 missed years = 6 forms × $25,000 = $150,000. The penalty is automatic — the IRS computer system assesses it without a human reviewing your case. You receive a CP-15 notice in the mail at the LLC's address of record. The notice gives you 90 days to respond before continuation penalties begin. It does not matter whether your LLC made any money, owed any US tax, or had any US-source income. The penalty is for failing to file the information return, not for failing to pay tax. A perfectly compliant foreign-owned LLC with $0 income and $0 tax due still owes $25,000 if it misses the filing.

What is the continuation penalty?#

If you receive an IRS notice about a missed Form 5472 and fail to file within 90 days, an additional $25,000 penalty is assessed for each 30-day period (or fraction of) that passes. There is no statutory cap — penalties can stack indefinitely. Example timeline: Day 0, you miss the April 15 deadline. Day 270, the IRS mails you a CP-15 for $25,000. Day 360, the 90-day grace period expires. Day 390, another $25,000 is added. Day 420, another $25,000. By Day 540, you'd be at $25,000 × 6 = $150,000 for that single year if you keep ignoring the notices. This is why catching up quickly under DIIRSP — even years late — is dramatically cheaper than waiting for an IRS notice and then dragging your feet.

How do you avoid the penalty entirely?#

1. File on time — by April 15 of the year following the tax year, or by October 15 if you filed Form 7004 for an extension by April 15. 2. File completely — Parts I, II, III, IV, V, and VII of Form 5472, plus the pro forma Form 1120 with the "Foreign-Owned U.S. DE" stamp, plus the Part V supporting statement. 3. File by the right method — fax to +1-855-887-7737 (IRS Ogden PIN Unit) or mail certified to IRS Ogden, UT 84201-0023. The IRS does not accept these via e-file or email. 4. Keep your fax transmission receipt — it's the timestamped proof you filed before the deadline. The IRS does not send a separate confirmation. 5. Use a US address that can actually receive mail in case the IRS sends a notice.

How do you get the penalty abated under DIIRSP?#

If you've already missed filings, the IRS Delinquent International Information Return Submission Procedure (DIIRSP) lets you submit late returns with a Reasonable Cause Statement requesting penalty abatement. The statement must: • Explain specifically why the form wasn't filed on time. • Show that you acted in good faith and exercised ordinary business care and prudence. • Describe the circumstances honestly (lack of awareness as a first-time foreign LLC owner, reliance on a tax professional who didn't flag the obligation, illness, language barrier, etc.). • Confirm that you're now filing all delinquent returns concurrently and have taken steps to ensure future compliance. The IRS does NOT guarantee abatement, but well-documented first-time delinquencies have a high acceptance rate. Generic boilerplate statements are far less likely to succeed than ones tied to specific personal circumstances.

What triggers the penalty besides missing the filing deadline?#

Most foreign LLC owners assume the $25,000 penalty only applies to non-filers. It doesn't. The IRS treats these failures the same way: • Filing only Form 5472 without the pro forma Form 1120. • Filing Form 5472 without the Part V supporting statement when Part V has entries. • Filing with substantially incomplete information (e.g. Part IV blank when you took distributions). • Filing through a method the IRS doesn't accept (e-file attempts, email, wrong fax number). • Filing in the wrong tax year or with the wrong EIN. • Filing without wet/ink signatures where required. A careless DIY filing can trigger the same $25,000 penalty as not filing at all. This is the main reason we have an accountant review every filing on our service before it gets faxed.

What are real-world penalty scenarios?#

Scenario A — first-time owner, just missed: Carlos (Mexico) formed his Wyoming LLC in 2024 to run an Amazon FBA store. He learned about Form 5472 in May 2025, one month after the deadline. He files immediately under DIIRSP with a reasonable cause statement explaining first-time foreign owner unawareness. Typical outcome: penalty waived. Scenario B — multi-year catch-up: Mei (Hong Kong) has had a Delaware LLC since 2022 and never filed. In 2026 she discovers the obligation. She files 2022, 2023, 2024, and 2025 together as a single DIIRSP package. Typical outcome: penalty abatement granted for all four years if the reasonable cause statement is well-documented. Scenario C — ignored an IRS notice: Ahmed (UAE) received a CP-15 in July 2024 for missing tax year 2022 and didn't respond. By 2026 his single-year penalty has stacked to $100,000+ through the 30-day continuation rule. He still needs to file, plus negotiate the assessed penalty — much harder than scenarios A and B. The takeaway: act fast. Even multi-year catch-ups are vastly cheaper than waiting for an IRS notice and then delaying.

How do you handle the penalty if you can't pay?#

If the IRS assesses a penalty and you don't qualify for full abatement, you have options: • Partial abatement: the IRS may waive part of the penalty based on partial reasonable cause. • Installment agreement: pay over time, typically up to 72 months. • Offer in Compromise: in cases of genuine financial hardship, the IRS may accept less than the full amount. • First-Time Abate (FTA): a separate program for taxpayers with a clean compliance history of the prior 3 years. None of these are guaranteed and all are more complex than just filing on time. If you're already in penalty territory, talk to a tax professional or enrolled agent who handles international information returns.

Does the penalty apply to multi-member LLCs?#

Form 5472 also applies to US corporations that are 25%+ owned by a foreign person, but the filing is different and outside the scope of our service. The $25,000 penalty applies the same way for those filings under IRC § 6038A — but the actual forms include real income and tax calculations, not just a pro forma 1120. If your LLC has more than one member, our wizard will flag you out at the pre-flight step. You'll need a CPA familiar with foreign-owned partnerships (Form 8865) or corporations (Form 5472 + full Form 1120). The good news: we handle the most common foreign-owned LLC case (single-member, foreign-owned, disregarded for tax) at flat rates.

We handle the whole DIIRSP process#

Form5472 Prep automatically generates a Reasonable Cause Statement when you file a late return. The narrative is tailored to first-time foreign LLC owners — the most common DIIRSP scenario — and you can edit it in the wizard if your circumstances are different. Pricing for catch-up filings: • 1 year: Standard $199 · Rush $279 · Premium $449 (fax included) • 2-year DIIRSP catch-up: Standard $348 · Rush $428 · Premium $598 (fax included) • 3-year DIIRSP catch-up: Standard $497 · Rush $577 · Premium $747 (fax included) Filing all missed years together with one comprehensive reasonable cause statement gives the strongest abatement argument. Every package is reviewed by an accountant on our team before we fax to the IRS Ogden PIN Unit. 100% money-back guarantee if we fail to submit.

Bottom line#

The $25,000-per-form-per-year penalty is the single largest compliance risk most foreign LLC owners are unaware of. It's automatic, it stacks if ignored, and it applies even when your LLC owes zero US tax. Three things keep you safe: 1. File every year, on time, completely, by fax to +1-855-887-7737. 2. If you've missed filings, catch up under DIIRSP immediately with a reasonable cause statement. 3. Don't ignore IRS notices — the continuation penalty makes a manageable problem into a six-figure one. Our 15-minute online filer handles all of this from $199 (Standard), $279 (Rush), or $449 (Premium). IRS fax delivery included. +$149 per additional past year. Accountant-reviewed, with a money-back guarantee.

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Frequently asked questions

Is the $25,000 penalty per LLC or per year?: Both. It's $25,000 per Form 5472 you should have filed — and each LLC files one form per tax year. If you own 2 LLCs and missed 3 years on each, that's 6 forms × $25,000 = $150,000.
Will the IRS waive the penalty automatically?: No. You must affirmatively request abatement with a Reasonable Cause Statement filed alongside the late return. The IRS doesn't apply waivers on its own.
Has the IRS actually enforced this?: Yes. The IRS has automated penalty assessment for Form 5472 since 2018. Thousands of foreign LLC owners have received $25,000+ CP-15 notices in the mail. It is not a paper-tiger penalty.
If I file under DIIRSP, am I guaranteed the penalty is waived?: No, DIIRSP is a request, not a guarantee. That said, well-documented first-time late filings are typically accepted — the IRS published the procedure specifically to encourage voluntary catch-up by international information return filers.
What's a CP-15 notice?: It's the IRS form letter that assesses a civil penalty. For Form 5472 it's typically titled "Notice of Penalty Charge" and shows the $25,000 amount, the tax year, and a 90-day window before continuation penalties begin. Don't ignore it.
How is the penalty different from US income tax?: Totally different. Most foreign-owned single-member LLCs owe $0 in US federal income tax (their income is foreign-source). The $25,000 is an information-return penalty under IRC § 6038A — not a tax bill. It's punishment for not filing the disclosure, regardless of whether tax is owed.
If I file an extension, does that delay the penalty risk?: Yes. Filing Form 7004 by April 15 extends both the 1120 and the attached Form 5472 to October 15. As long as you file by the extended deadline, no penalty. Miss October 15 and you're in the same penalty position as missing April 15 without an extension.
Does the IRS apply the penalty to dormant LLCs?: Yes, if you had at least one reportable transaction. A truly dormant LLC (no bank account, zero activity) may have an argument that no filing was required — but the bar is very low. Most LLCs with even one wire to fund operations cross it.
Can I pay the penalty and skip the filing?: No. Paying a CP-15 penalty does not satisfy the filing requirement. You still owe the Form 5472 — and continuation penalties continue to stack until you actually file.
What does your service cost vs. the penalty exposure?: Our service is $199–$449 depending on tier and years. The penalty for a single missed year is $25,000 — a fraction of our service price. For multi-year catch-up packages (add $149 per additional past year), the math is even more compelling against ignoring the obligation.