Missed Form 5472? The $25,000 Penalty and How to Get It Waived

Every guide to Form 5472 quotes the same number: $25,000. It's correct, and it's still only the beginning. To understand what a penalty notice really means, you need to know four things: exactly what triggers the penalty, how the IRS assesses it, which routes to relief exist and which don't, and which deadlines run afterward. This page walks you through it step by step, quoting the IRS rules directly. What goes into the form itself is covered in How to complete Form 5472. No one can promise an outcome: the IRS alone decides every request.

1The penalty in the statute

The rule is Section 6038A(d) of the Internal Revenue Code. If a reporting corporation fails to furnish the required information on time, or fails to maintain the required records, it pays $25,000 for each tax year in which the failure occurs. For tax years beginning before January 1, 2018, the amount was $10,000. A single-member LLC with a foreign owner is also a reporting corporation, as it is treated as a domestic corporation for this purpose.

Three clarifications from the IRS instructions and manual matter. First: a substantially incomplete Form 5472 is treated as not filed. A form with blank required fields won't protect you. Second: the penalty applies per related party. The company files a separate form for each related party it did business with, and according to the manual the initial penalty is assessed once per related party and tax year, even if several failures occur together. Third: if the failure continues for more than 90 days after the IRS notifies the company, an additional $25,000 is added for each period of 30 days or part of one. This continuation penalty has no cap; it keeps running until the failure is fixed.

The instructions also refer to the criminal provisions of Sections 7203, 7206 and 7207 for failing to file or for false and fraudulent statements. That's not about a forgotten fax; it's about deliberately false filings.

2How the penalty is assessed

The IRS can assess the penalty in two ways. In the first, an examiner finds during an audit that Form 5472 is missing, late or incomplete, and assesses the penalty through an internal form. In the second, it happens automatically: if a Form 5472 arrives attached to a late Form 1120, the system assesses the penalty during processing. For a single-member LLC, that means if you file an overdue pro forma 1120 with Form 5472, expect the penalty to arise from processing alone.

2.1The letter: CP215

Once the penalty is assessed, the IRS sends a letter numbered CP215, Notice of Penalty Charge. The IRS describes it briefly: it has charged a civil penalty. The letter states the amount, the due date and how to pay. The number is in the top right corner. What to do with this and other letters is explained in Mail from the IRS.

2.2The statute of limitations stays open

One more point is often overlooked. If a Section 6038A filing is missing, the period in which the IRS can assess tax on the related return does not end until three years after the information is furnished. That's Section 6501(c)(8). So if you never file, you keep that period open.

3Why first-time relief doesn't apply

The IRS's best-known relief is called First Time Abate. If you filed the same return on time for the three prior years with no penalties, a failure-to-file, failure-to-pay or failure-to-deposit penalty is waived for one period. Starting with returns for tax year 2025, the IRS even applies this rule automatically for Forms 1040, 1065 and 1120, under the name Automatic Exemption from Penalty. The penalties are then never assessed at all.

As a rule, this doesn't help with Form 5472. First-time relief covers only failure-to-file, failure-to-pay and failure-to-deposit penalties, not the Section 6038A penalty. The IRS manual expressly lists Form 5472 among the cases where it doesn't apply, and the IRS page on the automatic exemption excludes information returns attached to another return.

The manual describes one exception. If the penalty was assessed automatically because Form 5472 was attached to a late Form 1120, and the penalty on that Form 1120 is waived under first-time relief, the Form 5472 penalty can be removed too. This also applies if no penalty was assessed on the Form 1120 because no tax was owed, but it would have qualified for relief. Two further conditions apply: there was no such penalty in the three prior years, and Form 1120 was not filed late in those years. Whether the exception applies in a given case is decided by the IRS based on its account records.

4Reasonable cause

The real route to relief is reasonable cause. Regulation 26 CFR 1.6038A-4(b) requires the company to set out expressly all the facts it relies on, in a written statement made under penalties of perjury. The company must show that it acted in good faith and that there was reasonable cause for the failure.

4.1The small corporation rule

The regulation has a separate rule for small corporations. A corporation is small if its gross receipts for the tax year don't exceed $20 million. For such a company, the IRS is to apply reasonable cause liberally when three conditions are met together: the company was unaware of its Section 6038A obligations, it has only limited presence in and contact with the US, and it responds promptly and fully to every IRS request to file Form 5472 and produce books and records.

In April 2026, the IRS published a Chief Counsel opinion on this rule, Chief Counsel Advice 202617012. It lists circumstances the IRS may consider on the question of unawareness, such as whether the company had previously filed Form 5472 and whether its owner controlled another company that filed Form 5472. But the opinion itself states that it may not be used or cited as precedent. It shows how the IRS thinks, without binding it.

4.2What this means for your request

So "I didn't know" isn't a request; it's one condition out of three. A solid request sets out the facts and backs them up: who owns the company, what income it had, what connection it has to the US, when and how the obligation came to light, and what has happened since. The manual recommends considering reasonable cause for a year only once all missing returns have been filed. There is no reasonable cause relief for the continuation penalty: under the regulation and the manual, reasonable cause can exist at most until 90 days after the IRS notice.

5The request, step by step

If you have received a letter, everything starts with the deadline in it. The IRS expects you to respond by the date stated, and if you want to preserve your appeal rights, you reply on time. After that, there is a fixed sequence.

• Read and classify the letter. Which penalty, which tax year, what amount, what deadline. The number in the top right corner tells you which notice it is.
• File what is missing. If the form has not been filed yet or was incomplete, file it in full. Only then is your request credible, and only then does the risk of the continuation penalty end.
• Write the explanation. A written statement with all the facts, supporting documents and a declaration under penalties of perjury, aligned with the requirements of the regulations.
• Arrange representation. If you want an advisor to speak with the IRS on your behalf, you grant them a power of attorney on Form 2848.
• If you have paid the penalty, use Form 843. Form 843 is used to request a refund or abatement of a penalty, including for reasonable cause. For a refund, the window is generally three years from filing the return or two years from payment, whichever ends later.

If a penalty is abated or reduced, the IRS says it adjusts the related interest automatically. If you do not pay until a decision is made, interest may keep accruing and the usual collection process may begin. Whether to pay and claim a refund or to file the request without paying is a case-by-case judgment.

6If the IRS says no

If the IRS denies the request, you can still go to the Independent Office of Appeals, the independent appeals body within the IRS. The IRS generally allows 30 days from the date of the denial letter; the deadline stated in the letter is what counts. Appeals reviews the case afresh, including reasonable cause. Anyone who gets there should already have submitted all facts and documents with the first request, because a well-documented file is the foundation of every appeal.

If enforcement action is already underway when the letter arrives, such as a notice of intent to levy, separate deadlines and rights apply, in particular the right to a Collection Due Process hearing. Mail from the IRS explains this.

7File late before the IRS writes to you

Many people notice the oversight themselves before the IRS does. For this situation, the IRS page on delinquent international information returns sets out a clear approach. If you are not under examination or criminal investigation and the IRS has not yet contacted you about the missing forms, you file them under the normal rules. You may attach a reasonable cause statement to a late filing.

The IRS is also open about what this means: penalties may be assessed through the normal process, even without the attached statement being considered during processing. So you may need to respond to a later letter and submit the statement again. Filing late is still the right move, because it ends the failure, and only a complete filer can credibly claim reasonable cause. How the form is structured is covered in Completing Form 5472.

8The other late penalties

Besides the Form 5472 penalty, there are the ordinary penalties for late filing and late payment. For Form 1120, they are 5 percent of the unpaid tax per month or part of a month for late filing and 0.5 percent for late payment, each capped at 25 percent. First Time Abate and, from tax year 2025, the automatic relief apply to these penalties. The condition is a clean history: the same return filed on time for the three prior years, no penalties other than the estimated tax penalty, and for businesses additional conditions concerning deposit penalties. Details on Form 1120 are under Form 1120, and on Form 1065 under Form 1065 and K-1.

The best penalty is the one that never happens. If you file every year by April 15 or extend in time with Form 7004, you will never need this page. The annual compliance calendar shows which filing is due when.

In short

• If Form 5472 is missing or substantially incomplete, the penalty is $25,000 per tax year and per related party; after IRS notice and 90 days, a further $25,000 is added for each 30-day period or part of one.
• The IRS notifies you of an assessed penalty with notice CP215.
• First Time Abate and the automatic relief generally do not apply to Form 5472; the route is reasonable cause, in writing and under penalties of perjury.
• For companies with gross receipts up to $20 million, the IRS is meant to apply reasonable cause generously when the three requirements of the regulations are met.
• If the IRS says no, Appeals remains, generally within 30 days of the denial letter.

How we help you

• IRS letters and penaltiesMail from the IRS? We reply, request penalty relief and put things right.
• Zero Tax Return LLCPro forma Form 1120 and Form 5472 for the single-member LLC.
• Corporation tax returnForm 1120 and Form 5472 for your US corporation.
• US Tax ConsultationYour US tax question, answered by people who know both sides.