Form 5472 penalty · checked 14 October 2026
Form 5472 $25,000 penalty: relief kit
If your foreign-owned US LLC missed Form 5472, or filed it late, the IRS can charge $25,000 per form, per year. First-time penalty relief doesn't apply. The way out is showing reasonable cause. Check where you stand for free, then get a ready-to-send reasonable cause statement and letters.
Your reasonable cause statement and letters
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1. Reasonable cause statement
2. Cover letter for the late filing
3. Abatement request (reply to the penalty notice)
Mailing and fax checklist
Who this is for
A US LLC with one owner who lives outside the US, not taxed as a corporation (a "disregarded entity"). It must file a pro forma Form 1120 with Form 5472 every year with a reportable transaction, even with no income. It's due 15 April (Form 7004 moves it to 15 October). See the Form 5472 guide.
The penalty
- $25,000 per form, per year for not filing, filing late, or filing an incomplete form (IRC §6038A(d)).
- Another $25,000 for each 30 days the failure continues more than 90 days after the IRS writes to you. There's no cap.
- The IRS often charges it automatically when a late form arrives, with notice CP215 or similar.
Can the IRS really assess it?
In 2023 the Tax Court ruled in Farhy that the IRS couldn't assess a similar penalty (for Form 5471) without going to court first. In 2024 the D.C. Circuit Court of Appeals reversed that ruling. So these foreign information return penalties can be assessed directly, and you shouldn't rely on Farhy to make one go away.
How relief works
- First-time abatement doesn't apply. It only covers failure-to-file, failure-to-pay and failure-to-deposit penalties.
- Reasonable cause does. You show the failure was due to reasonable cause and not wilful neglect (Treas. Reg. §1.6038A-4(b)). Facts that help: you relied on a professional, a formation service told you nothing was needed, serious illness, a disaster, and filing as soon as you found out. Not knowing the law is weak on its own, but it's often argued alongside other facts.
- Not filed yet? File now, with a reasonable cause statement attached. Penalties can still be assessed on late forms, so the statement matters.
- Got a notice? Reply by the date on it with a written abatement request (a letter, or Form 843). If it's refused, ask for an Appeals review by the deadline in the refusal letter, usually 30 days.
- Sending: the pro forma 1120 and Form 5472 can be faxed to 855-887-7737 or mailed to the address in the instructions. Replies to a notice go to the address on the notice. Keep proof of sending.
When to hire a tax professional
Get one if the penalty could pass $50,000, if the IRS has already refused to remove it, or if you've had collection letters. A professional can also ask for a conference with Appeals and spot facts you may have missed.
Check everything else your LLC owes
Sources: IRS, About Form 5472 and instructions; IRC §6038A(d); Treas. Reg. §1.6038A-4(b); Golding & Golding on the Farhy reversal; Taxes for Expats, Form 5472 penalty; Beancount, May 2026. Checked 14 Oct 2026. Information, not legal or tax advice.