The Form 5472 $25,000 Penalty Explained

The Form 5472 penalty is $25,000 under IRC §6038A(d) for each failure to file a required Form 5472 when due and in the manner prescribed, or to keep the required records. The IRS instructions say a substantially incomplete Form 5472 counts as a failure to file.

If the failure continues for more than 90 days after the IRS mails a notice, an additional $25,000 applies for each 30-day period, or part of one, that it continues. The IRS manual says this continuation penalty has no maximum and that the initial penalty is asserted once per related party per tax year (IRM 20.1.9.5.4). For tax years beginning before January 1, 2018, both amounts were $10,000.

The penalty is for the missing information, not for unpaid tax, so it can apply to an LLC that owes no US income tax. Estimate your own exposure with the Form 5472 penalty calculator.

$25,000 per Form 5472, per tax year. If you missed 3 years of filing for one LLC, that's $75,000 in initial penalties. If you own multiple LLCs and missed all of them, multiply accordingly: 2 LLCs × 3 missed years = 6 forms × $25,000 = $150,000.

An LLC with more than one related party files one Form 5472 per related party, and the IRS manual says the initial penalty applies per related party per tax year.

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 assesses $25,000 (billed on a CP 215, Notice of Penalty Charge) and mails notice of the failure. Day 360, the 90-day period after that notice ends. From Day 361, each 30-day period or part of one adds $25,000. By Day 540 that is six periods: $25,000 + 6 × $25,000 = $175,000 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.

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 or mail to Internal Revenue Service, 1973 Rulon White Blvd, M/S 6112, Attn: PIN Unit, Ogden, UT 84201. The IRS instructions say a foreign-owned US DE cannot file Form 5472 electronically.
4. Keep your fax transmission receipt — it records provider-reported transmission, not IRS acceptance. The current instructions do not describe a routine acceptance acknowledgment for this faxed package.
5. Use a US address that can actually receive mail in case the IRS sends a notice.

Follow the instructions on the IRS penalty notice and send a written request showing reasonable cause. Treasury Regulation §1.6038A-4(b) requires an affirmative showing of all the facts in a written statement made under penalties of perjury. The IRS penalty relief page says relief can be requested in writing with Form 843.

What the IRS sources say about the request:

• File every missing return first. The IRS manual recommends that reasonable cause not be considered for any year until all delinquent returns have been filed (IRM 20.1.9.5.5).
• Sign under penalties of perjury. The manual says requests to abate international penalties for reasonable cause should contain that declaration (IRM 20.1.9.1.5).
• Treat the continuation penalty separately. The manual says the latest date reasonable cause can exist is 90 days after the IRS notice, so there is no reasonable cause exception for the continuation penalty (IRM 20.1.9.5.5).
• Do not rely on relief for the Form 1120. The manual says relief granted on the related income tax return does not automatically relieve the failure to file the information return (IRM 20.1.9.1.5).

Our Form 5472 reasonable cause statement guide covers what to put in the statement. If the returns themselves are still missing, our late Form 5472 filing service prepares them. No request is guaranteed to succeed.

Reasonable cause means you acted in good faith and the failure happened despite ordinary business care and prudence; the IRS decides it case by case. For Form 5472, Treasury Regulation §1.6038A-4(b) says reasonable cause is applied liberally for a small corporation that meets specific conditions.

Under §1.6038A-4(b)(2)(ii), as summarised in IRM 20.1.9.5.5, that liberal approach applies to a small corporation that:

• had no knowledge of the section 6038A requirements;
• has limited presence in and contact with the United States;
• promptly and fully complies with all IRS requests to file Form 5472; and
• promptly and fully complies with all requests for books and records relevant to the reportable transaction.

The manual defines a small corporation as one with gross receipts of $20,000,000 or less for the tax year, and notes there is no small-corporation exception from filing Form 5472 itself.

The manual also lists reasons that are not enough on their own: that a foreign country would penalize disclosure, that a foreign trustee refused to provide information, or that you relied on another person to file the return (IRM 20.1.9.1.5). Whether your facts qualify is for the IRS to decide.

Generally no. The IRS manual (IRM 20.1.1.3.3.2.1) lists Form 5472 among returns where first-time abatement does not apply, because it is an event-based filing. IRM 20.1.9.5.5 gives one narrow exception, tied to first-time abatement of the failure-to-file penalty on the related Form 1120.

The exception covers the initial penalty the IRS assesses systemically when a late Form 5472 is attached to a late-filed Form 1120. Under IRM 20.1.9.5.5, that penalty may also be abated under first-time abatement when the failure-to-file penalty on the related Form 1120 is abated that way, or would have been eligible but was not assessed because there was $0 tax due or the return was fully paid, and:

• there were no similar Form 5472 penalties in the three prior periods; and
• the related Form 1120 was not filed late in the three prior periods.

The manual does not say how this exception applies to a foreign-owned LLC's pro forma Form 1120, so treat it as a question to raise, not a promise. Where it does not apply, the manual says relief is still available if reasonable cause is shown.

If the IRS denies your written request to remove the penalty, you may be able to request a conference with the IRS Independent Office of Appeals. The IRS says you generally have 30 days from the date of the rejection letter, and the letter gives the exact deadline.

For international information return penalties such as this one, the IRS manual says Appeals provides a prepayment, post-assessment appeal process, and an accelerated process for certain international penalties (IRM 20.1.9.1.5). IRS Publication 4576 gives an overview of the penalty appeals process.

The IRS says to send an explanation of the detailed facts and circumstances with your appeal request. Anyone other than you can discuss the penalty with the IRS only with an authorization such as Form 2848 or Form 8821 (IRM 20.1.9.1.5). An appeal is a review, not a guaranteed result.

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 and specifically. The IRS manual says relying on another person to file is not, by itself, reasonable cause.
• Confirm that you're now filing all delinquent returns concurrently and have taken steps to ensure future compliance.

The IRS does NOT guarantee abatement. The IRS does not publish DIIRSP outcome data, and its DIIRSP page says penalties may be assessed during processing without considering the attached reasonable-cause statement. A specific, documented statement is the strongest basis for responding if a penalty notice (such as CP 215) follows.

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.

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.

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. No outcome is guaranteed.

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. No outcome is guaranteed: penalties may still be assessed during processing, and her documented statement is then the basis for responding.

Scenario C — ignored an IRS notice: Ahmed (UAE) received a CP 215 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.

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: ask the IRS about paying over time.
• Offer in Compromise: in cases of genuine financial hardship, the IRS may accept less than the full amount.
• First-Time Abate (FTA): the IRS manual says it generally does not apply to Form 5472 penalties, apart from the narrow Form 1120-linked exception described above.

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.

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.