More common than you think
Many LLC owners discover Form 5472 late, sometimes years after formation. Yet the obligation starts in the first year with a transaction between you and the company, and simply paying the formation fees yourself counts as one.
What is at stake
The IRS sets a $25,000 penalty for each Form 5472 that is missing or incomplete, for each year. If the form is still not filed 90 days after an IRS notice, an extra $25,000 penalty can apply for each 30-day period.
The IRS late filing procedure
The IRS has a procedure for late international information returns (Delinquent International Information Return Submission Procedures). It is for taxpayers who are not already under examination and have not yet been contacted by the IRS about these returns. You file the missing forms with a statement of reasonable cause for the delay. The IRS does not apply an automatic penalty under this procedure, but it reviews each case: nothing is guaranteed.
Steps to get back in line
The usual order:
- List the years concerned since the LLC was formed
- Rebuild the transactions between you and the company (contributions, expenses paid, withdrawals)
- Prepare Form 5472 and the pro forma Form 1120 for each year
- Write the reasonable cause statement
- Send everything to the IRS following its instructions, and keep proof of sending
Why act quickly
The late filing procedure is no longer available once the IRS has contacted you or opened an examination. The sooner you file, the more options you keep.
How ClicGlow can help
We rebuild the missing years with you and have a licensed professional prepare and sign the returns. This content is for information only: every situation must be reviewed before anything is filed.
Official sources
This article is for information only and is not legal or tax advice. The rules mentioned may have changed since the update date.
