Did you miss a form 5472 at some point? Normally this means big penalties that are nearly impossible to waive, but finally there is some relief. The IRS sent out a news blast today with some great news for corporations that file form 5472 – they are waiving penalties on late filed international information returns for 2019 and 2020. This is huge for corporations with foreign owners, as many have avoided filing for fear of the $25,000 per form penalty being assessed.
The IRS has announced that they will waive international information return late filing penalties, specifically including penalties related to Form 5471 and Form 5472, for 2019 and 2020 tax years. They have rolled this out to meet Covid-19 pandemic penalty relief mandates that had largely been ignored until now by the understaffed IRS. However, the IRS is only offering this grace period for a short window of time – only on returns filed by September 30th, 2022, so if you have past-due returns for those years it is critical to file right away.
If you have prior years that you missed filing returns for, this is a huge opportunity to get caught up without the $25,000 per form 5472 penalties being applied. This also is a good reminder to get everything finished up for the 2021 filing year now, as it is unlikely the IRS will be so gracious again in the future, the IRS normally fights these penalties tooth and nail, and has been emboldened lately by many wins in tax court. For help with late or current tax returns, you can sign up for tax returns here.
If you have already filed your corporate tax returns, no need to worry, penalty relief is automatic. This means you do not need to apply for it, and if there is an ongoing resolution case for 2019 or 2020, the penalties will be automatically abated. If the penalties were already paid, you will receive a credit or refund. If you have any questions, reach out as we are always here to help.
The bad news about this form 5472 penalty relief is it means the IRS is clearing off their slate to pursue other forms of revenue raisers. This is a signal that there is greater enforcement coming, especially as the recent Inflation Reduction Act included $80 billion dollars of new IRS funding over the next 10 years, of which $45.6 billion is earmarked to go towards increased audits.
Can Cleer help me with filing Form 5472?
We have recently seen a couple clients receive notices for missing 5472s already for 2021 tax year when an extension was not received by the IRS but a prior year tax return with Form 5472 was filed. Thus the IRS is probably planning to send out a massive amount of penalty letters to non-filers after this very short grace period expires. Remember that in order to get this relief, the returns for those years must be filed by September 30th, 2022, which is a very short timeline to get compliant! So sign up for tax preparation right away to not miss this rare IRS penalty abatement opportunity.
Here is the link to the IRS news for reference: https://www.irs.gov/pub/irs-drop/n-22-36.pdf
