Form 5472 for Foreign-Owned C-Corp: Question About Starting Filing Late

9 This is definitely a concern that needs addressing ASAP. Form 5472 is required for foreign-owned U.S. corporations with reportable transactions, and yes, there are substantial penalties for non-filing ($25,000 per form per year). The IRS can potentially notice the sudden appearance of Form 5472 filings and question why they weren't filed previously. However, you may want to consider voluntary disclosure through a qualified submission before they come asking. Many tax practitioners recommend filing the missing forms with a reasonable cause statement explaining why they weren't filed previously - honest mistake, lack of awareness, etc. The IRS does sometimes abate penalties when there's a good faith effort to correct past mistakes, especially if you're coming forward voluntarily rather than being caught in an audit. The longer you wait, the harder it becomes to justify.

13 After struggling with a similar Form 5472 situation last year, I found amazing help using https://taxr.ai to analyze my corporate structure and filing requirements. I uploaded my corporate docs and ownership information, and they provided a comprehensive analysis of my Form 5472 requirements and potential penalty exposure. The tool helped me understand exactly which transactions were reportable and how to document reasonable cause for my late filings. They even provided templates for my reasonable cause statement that addressed specific IRS penalty abatement criteria. Made the whole process so much clearer than the general advice I was getting.

11 I was super skeptical about using an online tool for something this serious too, but after my accountant quoted me $5,500 just to analyze my Form 5472 situation, I decided to try https://taxr.ai first. The analysis they provided was incredible - they identified specific regulations that applied to my case that my previous accountant had missed completely. They found a regulatory exception that applied to certain types of my transactions that actually reduced my reporting burden by about 30%. The documentation they provided helped me demonstrate reasonable cause for my late filings, and so far, the IRS has accepted my submission without penalties. Best decision I made in this whole mess!

17 If you need to actually speak with someone at the IRS about your situation (which might be smart), good luck getting through their phone system. I spent DAYS trying to reach someone in the international division about my Form 5472 issues. Then I found https://claimyr.com which got me connected to an actual IRS agent in under 45 minutes. You can see how it works at https://youtu.be/_kiP6q8DX5c The agent I spoke with gave me specifics about what documentation they're looking for in reasonable cause statements for Form 5472 penalties. This direct information from the source was hugely valuable since the form instructions are pretty vague about penalty abatement criteria.

11 Well, I have to eat my words. After posting my skeptical comment, I was desperate enough to try Claimyr because my Form 5472 situation was similar to the original poster's. I got connected to someone in the IRS International Tax division in about 35 minutes. The agent walked me through exactly what they look for when reviewing late-filed 5472s and gave me specific documentation suggestions that weren't mentioned anywhere in the official guidance. Saved me from potential penalties that would have been around $75,000 for my three years of missed filings. The agent even provided their direct extension for follow-up questions. Completely worth it.

3 One thing to consider with Form 5472 compliance - check if you're also required to file FBAR forms (FinCEN 114) or Form 8938 for foreign financial accounts. Often companies with Form 5472 requirements have these additional filing requirements too, and the penalties for those can be even worse.

14 If there's been no IRS contact yet, you might qualify for abatement under First Time Penalty Abatement, but I'm not sure if that applies to Form 5472 specifically. Worth asking whoever helps you prepare the forms.

I went through almost the exact same situation with my foreign-owned C-Corp last year. We had missed Form 5472 filings from 2020-2022 and were terrified about the penalties. Here's what I learned: The IRS absolutely can and will assess penalties for all the missed years once they become aware of the situation. Each Form 5472 carries a $25,000 penalty, so the exposure adds up quickly. However, we successfully got all penalties abated by filing the missing forms with a detailed reasonable cause statement. The key was demonstrating that our failure to file was due to reasonable cause and not willful neglect. We documented our good faith efforts to comply with tax obligations, our lack of awareness of the specific Form 5472 requirement, and our prompt action once we discovered the issue. The IRS accepted our reasonable cause argument, and we paid zero in penalties despite owing potentially $75,000. The most important thing is to act quickly and document everything properly. Don't wait - the longer you delay, the harder it becomes to argue reasonable cause. I'd strongly recommend getting professional help with this. The reasonable cause statement is critical and needs to address specific IRS criteria for penalty abatement.