We knew that since 2009 the IRS has automatically assessed a $10,000 penalty for late-filed Forms 5471's - Information Return of US Persons With Respect to Certain Foreign Corporations. However,
we have been receiving a lot of calls from businesses who have recently received penalty notices regarding late filed or non-filed Form 5472's.
Upon further investigation, we discovered that the IRS has updated its IRM 20.1.9, Penalty Handbook, International Penalties on March 21, 2013 to now include and Automatic Assessment of this $10,000 Penalty for Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business.
The Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business (Under Sections 6038A and 6038C of the Internal Revenue Code), is filed as an attachment to the U.S. income tax return by the due date of that return, including extensions. If the reporting corporation’s income tax return is not timely filed, Form 5472 nonetheless must be timely filed at the campus where the return is due. When the income tax return is ultimately filed, a copy of Form 5472 must be attached.
The IRM 20.1.9, Penalty Handbook, International Penalties also provides:
Pattern Letter for Failure to File Form 5472 ( Form Letter) See Exhibit 20.1.9-8
- Has failed to timely file Form 5472,
- Has filed a Form 5472 which is inaccurate or incomplete, or
- Has failed to maintain records of transactions with related parties.
Timely file a separate Form 5472 with respect to each related party with which it had a reportable transaction during such taxable year,
Maintain the required records relating to a reportable transaction, or
In the case of records maintained outside the U.S., meet the non-U.S. record maintenance requirements.
Automatic $10,000 Penalty for Form 5472?
Contact the Tax Lawyers at
Read more at: Tax Times blog