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

Both. It's $25,000 per Form 5472 you should have filed. If you own 2 LLCs and missed 3 years, 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.

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.

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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. The penalty doubles if you don't fix it within 90 days of an IRS notice. Here's how the penalty works and how to either avoid it or get it abated.

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How the penalty is 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. The penalty is automatic — the IRS computer system assesses it without a human reviewing your case. You'll receive a CP-15 notice in the mail.

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) that passes. There is no cap — penalties can stack indefinitely.

How to avoid the penalty

1. File on time — by April 15, or by October 15 if you filed an extension 2. File completely — Parts I, II, III, IV, V, and VII of Form 5472, plus a pro forma 1120 and a Part V supporting statement 3. File by the right method — fax to +1-855-887-7737 or mail to IRS Ogden PIN Unit 4. Keep your fax confirmation as proof

How to get the penalty abated (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 why the form wasn't filed on time • Show you acted in good faith and exercised ordinary business care • Be specific about the circumstances (illness, reliance on a professional, language barrier, lack of awareness) The IRS does NOT guarantee abatement, but well-written reasonable cause statements have a high success rate for first-time delinquencies.

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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. If you own 2 LLCs and missed 3 years, 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.
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.