Can I get first time penalty abatement for late Form 5472 filed with a late 1120 return?

Thanks for the helpful info. Do you know if I need to use a specific IRS form to request the first time abatement? And should I wait until I actually receive a penalty notice for both the 5472 and 1120, or should I be proactive and request the abatement now?

You don't need a specific form for requesting First Time Abatement. You can either call the number on your penalty notice or write a letter in response to it. I generally recommend waiting until you receive the actual assessment notices since the IRS won't consider an abatement request for penalties that haven't been formally assessed yet. For your letter, be sure to reference your clean compliance history (the IRS will verify this), explain the circumstances with your Asian suppliers that caused the delay, and clearly state that you've taken steps to ensure timely filing in the future. Including a statement like "I request first-time penalty abatement under the IRS First Time Abatement policy" makes it clear exactly what you're asking for.

Does it work for businesses or just individuals? Our corporation is in a similar boat with a late 5472 and I'm worried about the $25,000 penalty. Our tax guy is useless and just keeps saying "let's wait and see what the IRS does.

I'm skeptical about these services. How do you know they're not just generating generic letters that you could write yourself? $25k penalties are no joke... would you trust some AI tool with that much money on the line?

It absolutely works for businesses - that's exactly what we used it for with our S-corporation's late 5472. The system specifically addresses business tax penalties and has different templates for different entity types. Regarding whether it's just generating generic letters - definitely not. The letter it created included specific references to our situation and cited multiple IRS internal policy manuals and relevant tax court cases specifically dealing with Form 5472 penalties. It knew exactly which penalty abatement approach works best for international information returns versus domestic late filing penalties. There's no way I could have researched all that myself.

How does that even work? The IRS phone system is a nightmare... you're saying this service somehow jumps the queue? I've been trying to reach someone about penalty abatement for 3 weeks.

Sounds like a complete waste of money. If the IRS is going to abate your penalty, they'll do it whether you call or write a letter. I filed a written request for my late S-corp return and got the penalties removed without having to talk to anyone.

It doesn't jump the queue - it just waits in it for you. Their system dials continuously using their own phone system and algorithms to navigate the IRS menu options. When they finally get through to a human agent, that's when they call you to connect. So you're not cutting in line, just avoiding spending hours with a phone to your ear. The advantage of speaking to someone directly is that they can make the determination while you're on the call. With written requests, it can take months, and if there's any confusion or they need additional information, you're looking at even more delays. My penalty was abated immediately during the call, and I received written confirmation a week later.

Thanks so much for this insight! Would you recommend addressing both the 1120 penalty and the 5472 penalty in the same letter, or should I handle them separately since they're treated differently by the IRS?

I would definitely handle them in the same letter, but create distinct sections for each penalty. Start with a general introduction about your compliance history, then have one section specifically addressing the 1120 under the standard FTA guidelines, and another section specifically for the 5472 that focuses more on reasonable cause arguments. The reason I recommend keeping them together is that the IRS agent will be able to see your entire situation holistically. The fact that both forms were late for the same reason strengthens your case that this was an unusual circumstance, not negligence. Just make sure you're clear which penalty abatement standard you're applying to which form - FTA for the 1120 and reasonable cause (with emphasis on first-time error) for the 5472.

How long did the process take from your initial penalty notice to getting it resolved? We're in month 4 of waiting for a response to our abatement request and starting to get worried.

This is really helpful - thank you for sharing the specific details about what worked in your second request! I'm curious about the IRS transcripts you mentioned including. Did you request those separately from the IRS, or is there an easier way to get documentation of your compliance history? Also, when you say "practitioner priority line," does that mean you need to have a tax professional involved, or can business owners call that line directly if they have the right paperwork?

Great questions! For the IRS transcripts, you can request them directly without needing a tax professional. Go to the IRS website and use their "Get Transcript" tool - you can request Account Transcripts that show your filing and payment history for the past several years. This gives you official documentation of your compliance record that the IRS can easily verify. Regarding the practitioner priority line - you're right that it's technically for tax professionals, but if you have a Power of Attorney (Form 2848) on file with a CPA or tax attorney, they can call that line for you. The regular taxpayer line works too, it just tends to have longer wait times. One thing I forgot to mention in my original post - make sure to keep copies of everything you send to the IRS and send your abatement request via certified mail. We almost had to resubmit our second request because they initially claimed they never received it, but the certified mail receipt saved us from starting over.

Great questions! For the IRS transcripts, you can request them directly without needing a tax professional. You can get them online through the IRS website (irs.gov) if you can verify your identity, or by calling the automated transcript line at 1-800-908-9946. The account transcripts show your filing and payment history, which is perfect documentation for proving your clean compliance record. Regarding the practitioner priority line - you're right that it's technically for tax professionals, but if you have a Power of Attorney (Form 2848) on file with a CPA or attorney, they can call on your behalf. Some business owners have also had success calling the regular business tax line and explaining they're following up on a penalty abatement request - sometimes they'll transfer you to someone who can provide updates. One tip I forgot to mention: when documenting your timeline, be very specific about dates and include any third-party issues that contributed to the delay. The IRS seems to be more sympathetic when they can see that external factors (like your supplier issues in Asia) created a domino effect that led to the late filing.