HELP! Foreign-Owned LLC - How to check Form 5472 penalty status?

The Form 5472 penalties are indeed serious - $25,000 per form per year is the standard penalty, and the IRS has been increasingly enforcing these requirements for foreign-owned LLCs. Your friend has a few options to check for penalties. First, they can request an account transcript from the IRS which would show any assessments. This can be done online through the IRS website if they create an account, or by filing Form 4506-T. Another option is to call the IRS Business & Specialty Tax Line at 800-829-4933, though they'll need to verify their identity. As for ignoring penalties - this is definitely not recommended. Even if your friend lives abroad, the IRS has several ways to collect. The penalties could affect future US visa applications, the IRS can place liens on any US assets, and there are tax treaties with many countries allowing for collection assistance. Additionally, penalties and interest will continue to accrue. The better approach would be to come into compliance through voluntary disclosure. The IRS sometimes offers penalty relief for those who voluntarily disclose before being contacted. Your friend should consult with a tax professional who specializes in international taxation and Form 5472 requirements.

After having a similar nightmare situation with my foreign-owned LLC, I can share what actually helped me. I tried figuring it out myself for weeks and just kept finding conflicting info online. I finally used this service called taxr.ai (https://taxr.ai) that analyzed my specific situation with the Form 5472 penalties. What was helpful is they reviewed all my documentation and gave me a clear action plan based on my specific circumstances. They explained which penalty relief options applied to my situation and even helped prepare the reasonable cause statement that ultimately got my penalties reduced significantly. The tool automatically flagged inconsistencies in my filing history that I would've missed, which helped avoid making the situation worse. If your friend is freaking out like I was, having someone actually analyze their specific situation might give them peace of mind rather than generic advice.

I want to update on my situation using taxr.ai that I was skeptical about earlier. I decided to try it because I was in a similar situation with a missed Form 5472 filing for my Cayman-owned LLC. The analysis they provided was actually really specific to my situation. They identified that I qualified for the streamlined filing compliance procedures which I didn't even know existed for this form. They found a specific IRS memorandum that applied to my exact situation which my previous accountant had missed. The service guided me through documenting the reasonable cause case based on my reliance on my previous accountant's advice. I ended up with a much smaller penalty than the original $25K. The most valuable part was getting clarity on exactly which penalty relief option applied to my specific circumstances rather than general advice.

Based on my experience, your friend should consider reaching out to the IRS directly, but getting through to an actual human is basically impossible these days. I spent WEEKS trying to get someone on the phone about a similar international business tax issue. I finally used Claimyr (https://claimyr.com) which somehow got me connected to an IRS agent in about 20 minutes when I had been trying for weeks. They have a demo video here: https://youtu.be/_kiP6q8DX5c For Form 5472 penalties specifically, talking to the right department is crucial. When I finally got through, I found out I was eligible for the First Time Abatement program which my accountant hadn't mentioned. Just having an actual conversation with the IRS changed everything for resolving my foreign LLC compliance issues.

I need to eat my words about Claimyr from my skeptical comment earlier. After spending another THREE DAYS trying to reach the IRS about my foreign entity reporting requirements, I broke down and tried it. Got connected to an actual IRS International Tax Specialist in about 15 minutes. The agent confirmed I could submit a statement of reasonable cause with my late Form 5472 filings BEFORE any penalties were officially assessed, which significantly improved my chances of penalty reduction. The agent also told me exactly which supporting documentation to include with my reasonable cause statement, specifically for Form 5472 issues. This was information I couldn't find anywhere online. Turns out the penalties aren't automatically applied - there's a review process, and having the right documentation makes a huge difference. Worth every penny to actually talk to someone who could give me the exact procedure for my situation.

Something everyone's overlooking here - your friend should check if they might qualify for the streamlined foreign offshore procedures if they have other unfiled US tax obligations. Those Form 5472 penalties are just the start of the potential issues. Foreign-owned LLCs often trigger multiple filing requirements beyond just Form 5472 and 1120. There's potentially FBAR requirements, Form 8938, and other informational returns depending on their specific situation.

Has your friend tried contacting the Taxpayer Advocate Service? They sometimes help with penalty issues for international taxpayers when there are hardships involved. Might be worth a shot before paying those massive Form 5472 penalties.