IRS Form 5472 Penalties and Enforcement
Form 5472: There are various international reporting forms U.S. persons may be required to file. In addition, when a person is a foreign person with certain ownership of – corporation or U.S. corporations owned by foreign persons, there is also a form required.
The Form is IRS Form 5472, and the failure to file the form may result in significant fines and offshore penalties.
The Internal Revenue Service has also developed various Penalty Waivers, Reasonable Cause options & Abatement
Unlike the majority of forms an individual files with internal revolution’s in order to get into compliance with international and offshore related matters, form 5472 is a bit different.
How Much are Form 5472 Penalties?
Form 5472 penalties are tough.
A penalty of $25,000 will be assessed on any reporting corporation that fails to file Form 5472 when due and in the manner prescribed.
The penalty also applies for failure to maintain records as required by Regulations section 1.6038A-3.
Substantially Incomplete Form
Note. Filing a substantially incomplete Form 5472 constitutes a failure to file Form 5472.
In other words, when it is time for you file Form 5471 it is important that you perform a diligent and reasonable search for the information necessary, and that you complete the form properly.
That does not mean that form has to be perfect but if it appears to the IRS that it is substantially incomplete, it may result in the IRS rejecting the form and issuing the penalties indicated above.
If a consolidated group is filing, it is important to note that each member of the group must file a separate Form 5472 (if required), and that each member of the group can get hit with a separate $25,000 penalty.
Moreover, there’s joint and several liability which means if the group was penalized a certain amount, that each member of the group is joint and severally liable for the total penalty of the group.
“Each member of a group of corporations filing a consolidated information return is a separate reporting corporation subject to a separate $25,000 penalty and each member is jointly and severally liable.”
Failure More than 90 Days
If you continue non-compliance and more than 90 days passes, the IRS can turn around and issue an additional second penalty in the amount of $25,000.
“If the failure continues for more than 90 days after notification by the IRS, an additional penalty of $25,000 will apply. “
It is important to note, that it is not common for the IRS to pursue criminal penalties regarding form 5472, unless the facts are egregious and would make the IRS to believe a true crime has been committed.
Still, the IRS reserves the right to pursue criminal penalties.
“Criminal penalties under sections 7203, 7206, and 7207 may also apply for failure to submit information or for filing false or fraudulent information.”
Golding & Golding: About Our International Tax Law Firm
Golding & Golding specializes exclusively in international tax, and specifically IRS offshore disclosure.
We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe. Our attorneys have worked with thousands of clients on offshore disclosure matters, including FATCA & FBAR.
Each case is led by a Board-Certified Tax Law Specialist with 20 years of experience, and the entire matter (tax and legal) is handled by our team, in-house.
*Please beware of copycat tax and law firms misleading the public about their credentials and experience.
Less than 1% of Tax Attorneys Nationwide Are Certified Specialists
Sean M. Golding is one of less than 350 Attorneys (out of more than 200,000 practicing California Attorneys) to earn the Certified Tax Law Specialist credential. The credential is awarded to less than 1% of Attorneys.
Recent Golding & Golding Case Highlights
- We represented a client in an 8-figure disclosure that spanned 7 countries.
- We represented a high-net-worth client to facilitate a complex expatriation with offshore disclosure.
- We represented an overseas family with bringing multiple businesses & personal investments into U.S. tax and offshore compliance.
- We took over a case from a small firm that unsuccessfully submitted multiple clients to IRS Offshore Disclosure.
- We successfully completed several recent disclosures for clients with assets ranging from $50,000 – $7,000,000+.
How to Hire Experienced Offshore Counsel?
Generally, experienced attorneys in this field will have the following credentials/experience:
- 20-years experience as a practicing attorney
- Extensive litigation, high-stakes audit and trial experience
- Board Certified Tax Law Specialist credential
- Master’s of Tax Law (LL.M.)
- Dually Licensed as an EA (Enrolled Agent) or CPA
Interested in Learning More about Golding & Golding?
No matter where in the world you reside, our international tax team can get you IRS offshore compliant.
Golding & Golding specializes in FBAR and FATCA. Contact our firm today for assistance with getting compliant.